ULH - Earnings call transcript Q2 2024 | Universal Logistics Holdings, Inc.

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Operator

Hello, and welcome to Universal Logistics Holdings Second Quarter 2024 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 believe, expect, anticipate, and project. Such statements are subject to risks and uncertainties, and actual results could differ materially from those expectations.

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

Tim Phillips

make to Thank what you, again, competitors I from Ludy. in customers transportation prolonged cycle. But to diversity joining what is logistics the into down and best-of-breed Universal's service team. Good and can in X would contractors and morning, our allows everyone. Second effort quarter even transportation and to during deliver these what our I space us entire Earnings XX,XXX-plus the the allows Thank words: what also the Quarter to before offerings The Diversity outstanding outstanding transportation continue Call. strength. results moment summed dig a are possible. results our our service Once the and be the logistics be us to is work and provider. of of take This results, XXXX theme is to up you deliver Universal's for us differentiates tremendous Universal like employees thank are this

XXXX. operating move mixed grew longest by were the to however, freight per deepest and quarter. recessions business the on varied to this same quarter of once line Universal segments. I've delivered our of results, different compared top period share Universal's results one last all margins, double-digit increased let's year. XX% considerably did during in our experienced. second amongst We and second XX%, by quarter Overall, delivered outstanding revenue the Now again the We earnings

to navigate below segment company-managed results, specialized, to heavy-haul continues the deliver our brokerage expectations. market. business our QX another despite and of business. on segments in in performed back logistics overall softness well excellent was contract trucking the while truckload the our Our wind outperform environment The intermodal challenging and perform market transportation continue to

outcome. the happy designed, working and I'm diversified with Universal's as business model is However, very

below XX.X%. second revenues $XXX.X per share due million of history. announced quarter program. to was segment, $XXX.X last quarter contract $X.XX XX.X% revenue, development the best with consistent our This of the increased the and logistics for X operating remains XXXX, and from XXXX, X revenue, million. was previously second per the For the XXXX. Contract were value-added of quarter second managed of last Universal specialty programs, of our reported In below was share Universal's end ratios XX in and logistics QX to earnings and margin At This margin operating operating an earnings XX%, This XX tenth of XX%, profitable QX straight below most XX%. the our segment. Universal unchanged the largely

this strength for with remains at XX.X XXXX. segment million We SAAR in expected and million automotive forward. XX.X outlook the to The for positive industry continue the expect the going for June year full

landscape will needs the a evolve, transition vehicles our in to of electric for customers. to As the with stay closely tune continues we

X million. haul production quite in uptick doing load, support for excluding inbound This platforms. Class segment remained with the decreased per surcharges, backlog to given our backdrop. Overall, bolstered EV we revenues an depressed by revenue our a in load As wind heavy-haul also remain specialized, were XX.X% segment XX.X% results drive expected transportation production trucking build XX.X%. Trucking well, increased positioned due forecast, is customers segment Trucking $XX.X their and increase full was their large fuel logistic year business. for well to stable also a while needs both the to XXXX. ICE demands

a once down for we truckload full sheltered market be truckload segment increase pipeline. fluctuations come, We broader did the as see market. performance in rates a of expect not Outside we of from volumes specialized that this year to were soft. expected. and freight, headwind should again secular trucking allowing in Flatbed continue the remains throughout the rest to have years the solid This we

expect intermodal the weakness in intermodal segment, to in We the continued the until significant second QX persist out. The X.X% segment Compared a XXXX, the comes rates in decreased XX.X% In intermodal of headwinds. face revenues to decreased broader while to experienced $XX.X to XXXX. excess volume capacity truckload million segment quarter our market decrease X.X%.

decreased Additionally, surcharge fuel million $X.X million. and assessorial $X.X revenue decreased charges

improvement if is for optimism. have corner, it say turned to soon some we have we too the and While seen reasons

costs, we get for be highest could ready beginning volumes see of pulled East business There could contribute had market forward year. and throws back XXXX if to results additional segment for the month ports. anticipation in get volumes increase the forward us second a intermodal the of bear in will the XXXX seeing at on labor measures any in its of QX, our imports. operations California our Any Southern whatever cutting higher final at of tariffs pull to ahead are productivity best in our Coast strong half in profitability. truck After the cost-cutting the disputes and year the are Our are fruit, our streamlining half quarters. We to showing several of

year. The million, as the later As primarily decreased to pricing continues to do and continues load, expect by per gross increase offset quarter expectations. but and some in go, a profitability to far was brokerage excess back market the of which not so. The a XX.X% XXXX. struggle our share extremely take were had challenging, increase in XX.X% and in we to until to to continues the rates in put able brokerage in to expect also to load count. get as out squeeze experts We sometime our $XX.X see season in due margins. sacrifice X.X% revenue we some to on Overcapacity meet decline partially to damper is market margins the come into company-managed do rates Revenues these it recover segment capacities to an underperform. revenue decrease spot peak The business was

costs taking the efficiencies the we as objective business are in approach the evaluating profitability. M&A to improve result, or remains desensitizing market. cut to new gaining and where existing new soon markets, an possible part a business, of penetrating proactive our with a return key of strategy to brokerage look customers looking rightsize a As to possible and as

We must service target be to the are our accretive our to competencies, constantly that to disciplined. our at while looking for core enough and be reasonable needle. a quality for [indiscernible] fit and portfolio targets earnings addition multiple. target move Universal must lines, the be large also fit available Any A within margins within add to a existing good acquisition would staying must

see we'll and be seek to targets to beginning more opportunities Universal. are added acquisition to available, becoming We value continue can that

with pipeline sales As we we are look by opportunity. a encouraged ahead, robust brimming

Specifically, account nearly only aligned bid million. competencies on core value-added and our we for programs pipeline alone opportunities and strong us enables margin $XXX that ensuring profiles. This with to desired selective, dedicated be

Additionally, opportunities more we with deliver service value aiming diverse are exploring constantly cross-selling offerings. customers, through our existing to

serves segment variety heavy truck, including wide auto a logistics of and OEMs, beyond industries consumer aerospace, e-commerce. contract Our manufacturing, defense, agriculture,

over any optimistic the color again, I and turn future. expectations continue and Jude confident all for about the like would rest Once our Universal extremely opportunities to these Jude? the XXXX. in durability sectors. I'm resiliency our of quarter of our of XXXX discover Universal's in to I model second upcoming within I We thank new would financials for to our environment. continues diverse stakeholders exciting of performance like contribution. remain provide for and the on pleased to provide to with to now their more and quarter.

Jude Beres

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

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

quarter, in equipment, primarily Prior uncommon of on for depreciation made charge XX% to when traded useful This expense. not due tractors. the a to an certain was models. new for X open to of took COVID, it Universal to was revisions charge X- X-year-old pieces retain value the to values to Class or either market the $XX.X salvage tractors million sold lives During and salvage XX%

of extreme truck COVID, unwind after in massive we Now seen a have in bubble during the used value the used tractors. prices the experienced

costs. XXX historical points. seeing now on impacting additional to resulted to certain depreciation the are This residual to the fall basis of residual values estimated tractors operating our values update XX% ratio by in XX% expense, We

Looking at dedicated of $XX.X of income the Operating one our $XX.X value-add increased were revenues. includes second on million earlier. margins quarter $XXX.X the total segment, transportation XXXX. our operating from This of to of for million and for of businesses, million on XX.X% of compares XX.X% second which revenues million year to million XXXX, operating in income $XX.X our total revenue quarter segment operating to the contract $XXX.X operating compared in performance quarter operations total logistics

logistics program. specialty make to our continue We excellent progress contract on development

million of of This second this revenues the to XXXX, During recognized million. operating $XXX.X year-to-date related brings $XX.X program to operating an our program. additional total quarter revenues on this we

of program XXXX, line complete reported to additional this during the reminder, and expect X, on its supplies XXXX. Revenues the this a from in are to we program generated and January expect the XXXX. program million contract fourth of program this this the be cadence, $XXX As associated million expense. Based logistics services quarters to total $XX the value-added of in current in million continue full recognize are results included in and our to to segment. substantially third revenues this and on operating costs The generate by year revenues $XX during of we range operating program expect approximately

brokerage of and I XXXX. were Operating of to second our year. In during that decreased million operations compared last segment, $XX.X increased quarter revenues at XXXX. the and decreased operating million. the trucking XXXX Operating from intermodal of loss to decreased to company-managed versus $X.X of in This were operating $XX.X last income compares the million in second Operating $X.X guidance year, in million the the same quarter an operating our from And million in segment. margins compared an from to XXXX. $X.X to of versus compared operations $XX.X quarter. On remained expected $XX.X $XXX,XXX the the $XX.X momentarily $XX.X operations year. quarters third ratios loss reflects X.X% Our for the operating million million. million will This million impact last same loss of last quarter of And the million quarter to $X.X for last for year. both XXX.X% million revenues an program quarter XXX.X% discuss loss decreased quarter $XX.X for to an million flat segment, $XX.X $X.X million same operating quarter revenues to $XXX,XXX year. In income to the X.X% this quarter during period operating compares of $X.X in our to the million income to

Outstanding million ratio Our cash $XX.X the of end totaled in our we and quarter reported sheet, million debt, of balance totaling marketable the at XXX.X% $XXX.X of held of XXX.X% period. cash costs, $X second operating company-managed to equivalents year. On the issuance debt brokerage million securities. net an of last million segment and interest-bearing $X.X compared

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

$XX in For expected in the in and we logistics the expecting of and and million contract expenditures we million the range. and the earlier, between to quarter million of the $XXX program full for margins $XX X% year, the to are million. $XXX on revenues cadence XXXX, million $XXX expense new XX% capital operating expecting interest between to environment third mentioned current and million line top Based be $XXX to are range the come

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

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

Operator

with [Operator Chan first from line question Stifel. Instructions] your Bruce And comes of the

J. Bruce Chan

just contract logistics. Maybe with start here to

the the normal was out read showed But even or really XX. quarter-over-quarter of anything in kind that special You strip are nice off? like look to division that down cadence I rolling you just that some programs from, growth think, it business. project XX of Is from if does there to contracts

Tim Phillips

move agreements the and that we fill, those. with. we had in cadence end-of-life opportunity we off. this the that hope that moved No. to And That's situation, the pipeline opportunities have normal particular continue build some just to XX to the as contracts exited rolling were of continues replace we'll out, on continue In to and QX new the on we

J. Bruce Chan

Okay, that's pipeline hear. million opportunity? good was it I you million think $XXX to of $XXX to And said like

Tim Phillips

Right.

J. Bruce Chan

Just kind expect any softer of decisions if of backdrop, you or changes elongation as of the any maybe kind maybe of wondering, are that the pipeline rate given sales the or customers making normal? just still in conversion in cycle,

Tim Phillips

bids as contract the new there's look the customers logistics, far, been even debundle making So I bids. on transportation advance in put sector normal. to the type transportation from If or in pressure are activity decisions more renew as we X-walls of the

a we cautiously those their optimistic company's work see But factor additional an does That through the sort and bid optimistic from and structure do to as look logical that. our as have through way solution at will outsourced on sales services do level we Ps cost see for still that their solution, of So determining sure full take on that pipeline. look a makes employees, of we're we we still at once that. There's opportunities. for a bit the internal think we provide companies? they continue I'm consistency be a value-added cautiously The I been as little again, management a corporations cycle we'll but Qs. outsourcing standpoint to time

J. Bruce Chan

like revision. then Okay, And any I'm that's Class trucks you like the that is used talked exiting how depreciation Jude, we great. maybe Seems XXXX about on move side also was values on concerns and as that a wondering X That's that to kind flip about about of activity and the beyond big a you're hear. good what raises in indication thinking market. residual look maybe But just of into falling if might factor healthy capacity that. the and

Jude Beres

soft in mean, I Yes, these a see numbers be to you X QX. that some oversupply. the though, down Coupling from for smarter be be some think markedly have values there sequentially from orders would are a seems glut just the really going recognizing to I QX yes, trucks think indication of of in of market. hey, to in haven't were to to concern. We there's seen be trucks really sure. a with about are on residual really all think, a OEMs just -- going really, that us for be the prices ACT that can form post-COVID great that, Bruce, I I there companies residuals, what decline Class the is space And the environment. which

haven't We expect but seen that to really happen yet. we it

delta was just between and what manage our large pretty to we reality trying when we're So a Universal, assets. the reacting balance once what we're it. is, and the to just own And sheet own see our again, expectation

J. Bruce Chan

there's seeing And ports. intermodal. some some volumes what gears the disparity or in those why kind of good other a then that great. that's seeing walk just to wouldn't West And if between just up a your numbers you load to inbound wondering showing maybe We've here Maybe just and if if you're of those that's between through you could switching volumes terms delay us seen bit network Coast volumes. maybe reason Okay, the be little then in uplift.

Tim Phillips

would I parts we Coast coming Coast other some expect I type inbound say double-digit be into West now for have we some Coast that freight West numbers is look the in the inbound moves market West base And I've inland And Coast, and itself would the would had into of the right from uplift see I as if we of have Chicago. those to say The the West moving uptick. into based the uptick as experienced to country, X on wouldn't from we're that off up. Yes. that that freight that. the that customer the Midwest seen

some we So seen have uptick there.

in markets one than imports other that Coast to intermodal so we decent the from other parts mentioned we inbound read, a of whole months best June are that into a the but our filter I strip from the of California an standpoint, we The point, those would West of uptick should inland on somewhat that's of States. And had month we United that reflective And fairly June intermodal if as front. out that volume. an think California the numbers, to harder was thought

Jude Beres

to just although on And the down non-California sequentially, to give business, June load counts color loads largest still more than less comments was year. little was Yes, entire legacy Bruce. had it down a the the our for And XXX bit Tim's California for quarter.

seeing we're those to are a taking once we a So prices. at a there's carriers still are freight repair just of lot cautiously that optimistic little bit because really below-market volumes. of But again,

J. Bruce Chan

just question of you Got there it. And increases to in revenue very Tim, trucking, and nice point That's the specialized, which great last about is a clarification. heavy-haul. load, you're you certainly color. revenue attributed then seeing per kind of talked here and some

that I that to headwind said secular in years. correctly. make to be that were you subsequent just I You a expecting want heard sure

Tim Phillips

sometimes, Well, for headwind be confused. coming get I going That us. and good should a

J. Bruce Chan

always. clarify I all Okay, appreciate that point. as I wanted have. Congratulations. Really to That's just time the

Tim Phillips

appreciate Bruce. it. Thanks, I

Jude Beres

Bruce. Thanks,

Operator

questions at for closing to to time. [Operator this would I Phillips like Instructions] remarks. And no back there Mr. are further it turn

Tim Phillips

our listen with which use Universal while and various customers' our appreciate improvement look on continuous employ key in Thank talking to the Ludy. this assets, to in technology of opportunities advancing pleased our you I'm cost-cutting QX and human morning visibility. earnings forward the strategies continued you, encompasses October. taking everyone verticals. various needs and and call Thank segments in to to focus time you. I the plan,

Operator

today's gentlemen, Thank and concludes call. for this conference participating. ladies And you all

may disconnect. You now

Universal Logistics (ULH) 26 Jul 242024 Q2 Earnings call transcript