ULH - Earnings call transcript Q1 2021 | Universal Logistics Holdings, Inc.

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Operator

Hello, and welcome to the Universal Logistics Holdings First Quarter 2021 Earnings conference call. [Operator Instructions].

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 the words such as belief, expect, anticipate and project. Such statements are subject to risks and uncertainties, and actual results could differ materially from those expectations.

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

Tim Phillips

and thank ever-changing plan to start We such in hiring the results with the by transportation Holdings versatile and environment believe Good sparred space. team Universal of dedicated even aggressive a challenge that developed of off both demonstrate our for shareholders made the strong Universal executable, to achieve for ever-present environment enough the call. want Earnings quarter weather year success. expect. who congratulating Logistics disruptions, together morning, would I results the the be First is you logistics an logistics I we professionals and Quarter of parts strategic the the plan reported shortages a our in the joining quarter first this and

our furthering technology believe workers will we and success, key drivers, personnel truck retain and While to to role office warehouse in will play in attract beyond. success XXXX professional be and our continued Universal's a ability

Now for reported per quarter $XXX.X Universal on earnings the yesterday's $X.XX and of on of million, quarter. operating revenue estimates both release, share beating earnings top first line. In bottom

period to Universal's reflection direct corresponding top-line four to can efficiencies operating operational are a the in that attributed segments. we they strategic quarter, by top-line our First additional ever earnings I drive operating been growth represented am revenue, This and for the service the first only XX%, in for all and is have XXXX. increasing and truckload road encouraged did were basis. quarter. quarter compared by first Dedicated year-over-year the some per we to the be the experienced months experience focus best the revenue highest of not quarter The results XX% the map of extremely also pricing services, operating intermodal opportunity a services gains in excellence. growing increase availability congestion two of has developed further first year. over share income value-added growth to respectively, the We and growth, on of Strong hindered reported. and XX.X% results last way led services-led as our where Brokerage and same power on unit experienced the lines. modest also headwind five year-over-year double-digit

However, in we did an of the March. in revenue see X% uptick month

for our served week. and a of weather busy during logistics impact of Continued to light-duty though at show strong than part our of days kept chip the to large part plants shortages contract several tail began shortages, role a vehicles being larger the group demand a QX. end up played with quarter, Even down couple in quarter, the

We the expect also as to $XX that am autos for quarter. I forecast XXXX. the remains Contract production for these the pleased be Group business additional report added disruptions for Logistics an wins in new million year strong temporary full to

rate run of launches in on full XXXX. to to We expect QX QX by be these a begin of XXXX

the continued rate confident we remain inventories. XXXX XX Although obtaining energy of division segment environment, a half tight below group's for The report very wins Group I'm extremely contractors able level loads with But industrial successful back QX remain qualified runway by robust. was for by Truckload Exiting the levels. paired the remain to revenue. metals, replacement, growth, goods in competitive, business the was quarter, the sequentially and in inventory base. propelled agent-based helped year Steel, its of indications favorable fueled new drivers driver top-line remain in pleased and driver agents. grow our to on-boarding Increased count Trucking new increase

tight experienced remained digits, but operation brokerage of last single finished but weather in high and quarter. February. the capacity Gross of trended the territory quarter the quarter for back company in margins Our the unfavorable in favorably the half positive part for the

revenue decreased XX.X%. spot revenue by contract in of rates. loads market increase handled XX.X% rates and by While the was our is driven year-over-year, running being The Currently, number was of better freight under pricing. new XX% higher up

For the record facilities intermodal operational terminal and import country. drayage, intermodal the around turn many at with deteriorated flow coupled volumes congestion, further times of

the additional volumes. We and empties and struggled facilities as for time loads also street experienced customers intermodal with

a Our modest saw revenue movement downward. per load move

increases we slower were to saw follow market, rates in contract While our suit. spot

for Intermodal Although improvement. road Drayage plenty of there's Group okay, performed

markets packages our for compensation We major renewed continue workforce. the efforts, recruiting drivers initiatives back our have to of all and our reviewing entice to

look we XXXX. ahead, on the of remainder bullish we As continue remain to

near-term the port to with and COVID. navigate and hope what rail final disruption, stages chain congestion to expect of We issues the be supply we

of some Although chip the robust believe for XXXX. will we demand QX, backlog up and revenue part in on half a very shortages have effect top-line sets second and

to As on execute and within ability our extremely range. optimistic numbers operationally mentioned the still I'm our forecasted before, deliver

We continue in experience, as quality contract actively verticals well focusing on as and expertise using into network verticals. and velocity in technology the branch our our new existing to to out evaluate opportunities logistics alternative spaces

moved and year. will appears of have a recently core million customer market that customer that XX interest of vehicle execute so days Our electric above remain to percentage committed below Contract dealerships revenue. a We at with the line it wins inventories this dipped top remain indicating the $XX.X grow extremely long predicted to on knowledge our base overall in segment, in reflects in runway Logistics greater space continue new and presence to projects. have our current Light SAR and launches, demand. to be optimistic vehicle grow originally and recent ability We forecast

half support the off Demand since been second robust that many disruption All X locations production the XXXX. point to parts. because vehicles We taken are to has of trucks demand. beginning high although fortunate Class in has there of year, indicators the a of also produce for

reducing drivers the are that strong Indications outlook times even Our fluidity drayage the experienced headwinds franchise in shifted by and and rates quarter. us by Better opportunities our the and allow turn seeing contractors. begin churn backlog driver base attract as leveraging itself QX, allowing some will will greater correct scale increasing and Drayage to times, bullish on Group our QX. while and we remains additional anchor first earning of contractor greater we is to higher end offer also though rates margin. for The

to opportunity. see Food, strong considerable for towards remain and and is segment deck rates back extremely beverage increase volumes goods step truckload levels to with on should pre-COVID starting the Our allow side. open metals consumer continuing and growth and industrial

our assets and better partnerships customer optimize regional We local strategic model. and pricing in and new continue to company to a work

We of drivers future, with the company makes will we year. our supply as the the we a continue capacity remainder third-party which of to brokerage, continued managed into qualified believe our navigate tight will carrier focus. near With the relationships contractors continue we see see headwinds to and

our strike spot hard and have balance We to while market contractual worked our between we'll evaluating customer business reprice efforts our and to business, a continue contractual partnerships.

more - for The Nowhere landscape need in drivers. theme is landscape the the common drivers is truck industry. than recruiting qualified additional competitive in a nowhere the

solid and increases by the remainder a of disrupted unemployment persist To widely the reported, from our graduates; new to we has the that structured quality compass have we contractor payouts, wages driver pool of limited headwind to the which fleet and and benefits trucks recruiting retention of ever-changing the address and workforce. of includes life options the needs strategy year. driver company to been the been for has clearinghouse, drug on-boarding school coronavirus, expect driver qualified As extended to creating this, the

efforts off. Our In the contractors are and able we drivers over first quarter were add of XXX fleet. to our to paying XXXX,

In To to quarter our successfully off new to X,XXX on-boarded workers customers. business onboard efforts as of was able to areas members our the XXX operations. to and service about assemble well. our recruiting better shy XX Our over excited XXXX, of been the first have wins, we all have of able just support other I'm across talent extremely our logistics paying contract associates Universal management warehouse are in we team.

continue customer team's disruption. to admire to is expand efforts. ability I people the women Universal company. committed men team towards goal a our are and common of to satisfaction. through our work truly of respect you your Thank and continue driven and to excellence continued work We talented who operational for

the to over Jude. like I'd call turn to Now Jude?

Jude Beres

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

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

first in for year-over-year $X.X In margins quarter $X.X quarter Included intermodal were from This in for XXXX for compared of $X.X of million in the for income in includes X.X% X.X%. of million operations Operating the million company XX.X% $XXX.X first compares income dedicated operations segment, to $XX.X million. of million quarter million $XX.X total to of in year. million to of $XXX includes XXXX. $XXX year. transportation operating our last of revenues our the million the last year, million declined compared period the the to total the from operating legal-related and million. increased which segment quarter in our decreased charges. current segment, income operating income while X.X% $XXX.X same compares Trucking Looking were quarter same $X.X million operations contract both operating last first businesses, revenues our value-add the This and XXXX. quarter on first increased agent-based also quarter our of $XXX,XXX operating of to the at to flat performance quarter from XX.X% revenues XXXX. operating in managed to operations, logistics X% to million million to margins the $X.X which compares income of This In segment, versus increased operating quarter trucking Operating $XX.X our are to revenues. at $XX.X $X on Income

a these our revenues in for operating have an XX.X% Excluding while costs our versus $X.X our negative Operating managed $XXX,XXX. quarter operating cash of segment at In last of the year. compared the million from we in the quarter year. nearly equivalents million brokerage quarter. $XX.X net rose of sheet, were million increased margins million same X.X On X.X% X% cash Outstanding $X.X year, to loss totaled million held debt $XX.X debt trucking the would the million company to last marketable quarter X% for $X.X compares operations of issuance also end and at to totaling income first $X.X of quarter the segment, This the million last of charges, period. $XXX operated to million $XX.X for and of securities. balance

estate our capex the be to come XX-month real for interest-bearing wins purchases. Universal's X.Xx. lease in contract leverage logistics for ASC Excluding million, between XXX, between full million $X.X was is million reported range to in related debt net expected is totaled the additional business year or our liabilities to before $XX Capital expected million quarter Interest to in $XX expense and million. forecasted expenditures and ratio target is X.Xx to segment any for year EBITDA. our $XX total $XX strategic the X the TTM EBITDA

remarks, highly shortage. disruptions chip auto are prepared business. in headwinds to short-term some supply the Tim due As at is his some our we in customers North logistics This chain our of experiencing to contract mentioned due American publicized

rate our current we these difficult revenues a currently per resolved disruptions a year, $X to it These negatively expect full within to impact week. approximately of at be top-line on predict impacting the is million quarter. While the are headwinds

$XXX X% range range. the of the to for in million Our million revenues margins X% to QX, original $XXX top-line in with forecast operating were

to Assuming the range by the be due we Timing, X% achieving targets. anticipate and to corrected operating variable revenue for million will model, our the disruptions should $XXX cost of on target between margin new are in those mid-QX, $XXX quarter. of influencer the quarterly remain X% course, largest and million

year, within full units robust of auto temporary for the be any will Given production the likely loss forecast made the within we up that believe year. production year,

in billion of For that reaffirming operating between reason, year the operating billion full margins $X.X and revenues are revenue to X% we and range. our guide $X.X total X%

our $X.XXX board Universal's of declared regular Finally, share dividend. directors per quarterly

we're is expected be close at paid X, payable of and shareholders X, to is Thea, on dividend XXXX. the take to XXXX, business of July record June questions. With ready quarter's on This to that, some

Operator

[Operator Please go a the compile roster. Instructions]. We'll for Citi. first Wetherbee just to question Q&A with moment from come will And ahead. pause the Chris

Christian Wetherbee

Very take you're you some helpful further maybe how understand that of being see sort step could of impacted of sort detail guess and customers' practically in facilities. of recovery of kind terms your I maybe out. a how if I just the playing by

a we've steps of of What XQ, that little you length I of far. production to potential normalized get so here you're these need mid- you guess some disruptions think the shortages bit begin reaccelerate saying sort and that maybe seen to are been the at I maybe can the levels. happen? back could surprised see think we've to do

are looking give thing point at into out back see confidence come we're at So you guys year? can some of and half you that what XQ that that going are slip the of further indicators maybe the maybe the not it to during positive this

Jude Beres

Jude. it's Hey, Chris,

going works plants are how when in not for going to operate that to kind of So when we're it is told really, and the operate. us advance they're

Universal And that in apply we can inbound assist for. labor support the is manufacturing so that logistics then to known obviously

we So middle as now, really of of insight right until the May. only have

expected current is. are and which recovery we basically going the have their tell be So plants times are to us closed be that open, what when to going plants schedules

they that times we're in can been have the really those only couple that So day. I we and that's to be have. tell a past weeks, you, insight the though, changed expecting mid-quarter, over that of so multiple numbers fluid

have So hearing just least next once of but again, the through few to that from what the we insight we're kind OEM's, we're weeks. at reacting

Tim Phillips

add auto's confident most long-range forecast, to want to the we're line out bit believe of facilities I'll know they a also. put very we we though products, color that around that little And wrapped Chris, still street. and the on those Even to what our because are we have that don't be successful we products in of

production. So continued we still see

are to right happy the we're So be in we spaces now. that

Christian Wetherbee

Yes. like seems Certainly, no moment. current it the at there's demand

to do several outlook about you you of obviously Maybe it, What the been sense. rate. talk have the terms? your quite opportunity of want Obviously, Maybe So of the want truckload about average and productivity? makes helpful. to in of revenue some Or kind lot here that obviously a per higher, degree talk about just includes year? side, talk dynamic? pure That's of tractor just this of the is want it understanding sort which you rate been for I for has significantly for that. appreciate to of sort next What to Or if if rates quarters a up what realization? turning do is sort spot rate bit. you think potential

Tim Phillips

is This Tim. Yes.

I on very outlook rates think our good. is

timely everything away. where or is. out demand we'll says a the that chain it to of XX% rights itself some extending that from rate you been that But replenished the will X% And moved. then QX, of said, the I'm see supply down or environment, on it's this international that, or that higher QX reanalyze on spot that lets to be from that experiencing segments. as we've congestion think be least even to into type truckload have the market that right the and seeing fashion rate up you needs inventories depending segment, anywhere customers what increases nothing standpoint and at reading break and going We where I there's an from in we're

So increases. closely, we're that continued pretty bids on it been we'll pretty confident as successful we've rate that the also come negotiating in these see up, We're with those. equally study confident customers and we'll

and standpoint even the blew it the side, board would assets. we opportunity kind see the company up for low across increases. continued I company rate a So for the redefine And asset double-digit local then network terminal regional the side, in truckload the and on of on

So we're make there environment sure know favorable, optimize it's the we our time now that executing an on our goal the and rate level. operational is to is, trucks

be will trucks layer the week. company revenue the those continue focus we optimize in for so that can full to per see So potential of to truck and the per

Christian Wetherbee

quarter maybe out to Okay. Intermodal, of where how you congestion think load facing in the the weather even thinking sort terms factors the how you're comps and that's were disruptions, about rail do dynamic but you of last ability there easier, are half Obviously, growth of stands? play back hurdles network you - out? look the kind in how first And of you high other tough comps year of obviously, and sort have it at guys service get the year. the from in and the do on do

how from of loads potentially you And of weather on cleaner there's broken? about some Or the the this here? on you margin So that absolute a how ramping on side? think think rail up Is the side maybe now intermodal improvement about do sort sort do it? is the run

Tim Phillips

I on in starting and/or earlier road, it inland seeing get the we're to those internal Memphis, getting pick I other starting what the where is rubber anchor to have coming up to that's markets, of customer, is freight disruptions. hit ships supply what prepared build. Chicago, I now increase. remarks that's in, much street flow we're now I the And time inland mean, chain mentioned to the seeing still disruption congestion we it it comes we markets, of think a yes, the some Well, don't I of whether a into it's to see see time better from season. when weather some the the at

now, two, the extra that further rotation. valuable What aggressive is a or chassis our compounds markets, sitting adding done so an now So own from the which on company asset problem. we've very that streets those assets, been on that's into standpoint, in day assets, the we've

a we loads fluidity. makes them our put with the problem for equipment. them As customers hot on, solve those to putting have complete option into not sensitive help us utilize It but does we're to markets that major nice

QX better some expect I itself, not but to congestion So get start exit to of alleviate QX. this totally we as to into

Our full the source once and to contractors then be, take will other two drivers plan to supply additional the number issue can a those running of up fluency or in intermodal. We we're contractors and step on the we handle the our did hit in opens drivers volumes. back

And little a for we to to the was we that things. of Universal there said because to thing to And bit work execute together. on due side was where acquisition, the of that being but from needed roadrunner of to the wanted but fallout acquisitions we last be together it some put together, we be course, contractors COVID, two and the terminals to the bigger one drivers last had a and of happen get to back that, profitability is

Christian Wetherbee

Okay. And either a it? opportunities? potential however revenue or do these ramp about one next think maybe by size around have, a perspective to perspective, year, just that's might could that bit want of that Yes. I the perspective of wanted up - to from of think fantastic. just more. XQ indulge volume put I think you with of numbers you those Where a will I kind a be, by touch you start-ups just on ramp or believe. two profit you No, fully me if you Can little you

Tim Phillips

Yes.

remarks? the about in mentioned prepared I talking had awards were You that my

Christian Wetherbee

That's right.

Tim Phillips

yes. Yes,

implement So layer year, that we of start we'll QX I this in that expect in. to to believe

we're quite few year. value-added allotments. and by side. we've been $XX awards rate we on take would what expect looking had Now that at equal transportation be it I to a that next that layer of have kind the just full in is the million run But and to

QX XXXX of that close a it at QX then $X - will million by QX, but a should runway of quarter be first to start-up, The mark. quarter be

Operator

from Bruce question a Stifel. Please go ahead. with have Chan do We

Bruce Chan

Great a with can start volume of just where would on like of little pressure seem to understand basic be the the the is load declines able some and like traction in we're little But revenue make this at bit so there. why quarter, maybe this a follow-up result to it a bit tight, want help per you congratulations. of side. because drivers that encountering market capacity more a us you'd I off a understand intermodal I level, there.

kind what's curious pressure. of that just yield driving So

Tim Phillips

have now a some of to acquisition head. explore it now and when haul of And That's that algorithm human an back and because and most we scratches to local at that is took business the on-boarding normal fully and to great business. network of. fond the of we cut XXXX, okay, has which Bruce. go happened so had board what we length that tough try was We recent time, we're at into, decisions of Roadrunner, we've their on looks a a explain that more question, longer out kind it which going very entered some right QX the regional made type were unprofitable evaluated some what But we're it work

QX revenue, QX you haul XX% of by length at revenue our say if stats, the would was I and mile the up - from about went to look QX per the XXXX XX%. actual XXXX So reduced actual about

truck load didn't back yourself, I and because I at turn that So turn of then count length your times a the and of the should yes. Then then shorter reflect shortened went and should looking go start also asset. better you to of in time would the haul. our factor the And per congestion say, say you optimization doing mean haul, that length you're have well, up

fallout, handle trucks marketplace trucks XX% everything fashion. congested also, get about a those if or trucks, XX% experienced into less have more loads the we and we on the - had we in So in numbers, we of could shorter to but merged of when top less through there's better had COVID where you some that,

what think that - better build I So to is times, load to hope normalcy start go revenue the we going turn to as that per to you're will to you're start you'll I start up. see see on

is again, continue average length of Now our XXX pretty It's - short. we under once miles. haul

factor of just it at what our kind freight it So a of was. with the and of relook major was, that's the length type haul haul

Bruce Chan

it. Got Okay.

is So long this story down short, some post mix intermingled of side? on to what's roadrunner in congestion with mostly the going changes

Tim Phillips

further. Yes. do Well, it's it went back then best we one me the when let evaluated with business go Yes, step is Universal, - for mixture of and it to what does have business. Roadrunner. And a works more local from

we on miles. of under more that that's business, bidding type XX So now start

length a have that short as you haul could ten as miles. be Now of

from XX going port to miles. You're DC to

types of bids on-boarding. successful in were had a we lot we of those that So extremely

benefit per it's fluency truck when which organization congestion the Now see turn increase, turns up, see in just run. times, should should of should the picks moves. we the We and those the long the benefits local

Bruce Chan

it. Got

together So just quarter, QX, of see we start your towards likely putting goods there, some of this flow maybe to this continued into suppose, around some country quarter, the back see we're the half, with but inflection? I to next pressure other comments

Tim Phillips

and flow I you be more there'll much continued the guys is goods, up. do, not probably some letting of on demand Yes, than pressure read the especially

around conversation, the back ports, going bring that then loads. congestion not fully didn't customer And pick those up their continued DC's. to speed be to they're but are is the issues the revolve of we assets there number at on fluencies in up around full to this So that whole the

chassis So or just or creating now DC there's day metropolitan it's at large load, we a what used not chassis load extending would yet. major go dropped be it's four markets. need And is days the up many and bottleneck the pick a so now into a potentially only emptied to back to in two a for the to of be many And out because facility these so. that next

Bruce Chan

it. Got

to moment. logistics see Then continued business. the contract to color. in the just over side great That's a Okay. wins for moving that Good

can we bit coming more verticals? where Just Or Are starting same within give existing the to are are that those vertical? new customers? in or some on customers wondering you little if a Is see us in? wins new we progress color auto

Tim Phillips

Yes.

to Not starting are all into new see We of purely them are progress some some verticals. new.

in we've would now, be with that in but not customers it Some type with space play done them business industrial is the we before. of that

that And I short-term So our the space our and other the sold approach has about you contract pretty spaces. because a footprint excited not logistics think is velocity in in auto really know, accuracy as in approach well sale.

these it's starting a in other customers got some with in things So wins them do we lot the we're of positive quarter. what some that to verticals front auto, of can we showing now in besides show finally first

we get can And in the about time some together. things that we talk we hope have that are still next we under hat positively that

perform really good seeing couple being the in can the space rapid them. we on for we're real So a the and sell also because some involved in it knowledge locations, already electric we're customer of and services we're a and things to gaining happening, well to there's interest in able

we're as that excited well. about pretty So

Bruce Chan

terrific. here. last then That's one Okay. And just

contract In new of core business? mix terms of, some profile of the terms similar wins, your of they margin are and profile in these again, legacy length and fairly margin as

Tim Phillips

Yes. contracts. three and margins to the of five-year in range Absolutely, Bruce, historical

Bruce Chan

Awesome. it. Got

in increasing as I one what maybe hearing independent really that driving win capacity? business Is need a that? to these the what's with And It good sneak coming wins terms here. agent was of rate? feedback, you're something in. can one Wondering that just Okay. in the from it else to see access as far Is guys agent last fundamentally that's that's very changing

Tim Phillips

remarks broke your Oh, up and the talking in you conversation, agent were - about the the there, of base? your you middle

Bruce Chan

Yes, exactly.

inflows? see it those wins. Just needing capacity something Is - to there guys or those driving particular something else? that's are those good Is in

Tim Phillips

your of, Well, think the has a fashion. would escalate. a those a and you have other detailed a of see with out taking some back-office they place and just in as well-run that dynamics carry and good need continue the trucking continue And I small care there run go a have things that marketplace to They Yes. company in put organization well you this, prices very own - insurance the effort home. of we to say good on forth some as I home recruit it's supportive call heavy to management when to

always we're and pipeline with with The them at, fit agent the we And a the but want lot. come going they as us. frank to opportunities looking is going to we're frank, be be they're opportunities. base, we at let's at for big, So frank new look aboard. We to be look it a be

So side. how on business that. year. We'll added in to And development continue pipeline see personnel diligent with We've agents. closing some full success the good on we remains the remain that new approach over we

I long So I market as continue into a think on new of the close lot bring that to think and to opportunity as see the we'll hot, there out company. remains agents them

Operator

Instructions]. [Operator

Okay, no time, I'm I'm And further further showing and this this at no time, showing questions. at responses.

Tim Phillips

you. forward to into appreciate we next I questions the and call, you Thanks dialing to quarter. Well, talking the Thank today. Super. for will look

Operator

thank and conference. for in Ladies today's gentlemen, you participating

You now may disconnect.

Universal Logistics (ULH) 2 May 212021 Q1 Earnings call transcript