ULH - Earnings call transcript Q4 2024 | Universal Logistics Holdings, Inc.

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Operator

Hello, and welcome to Universal Logistics Holdings' Fourth 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 and 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.

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

Tim Phillips

thank Thank you XXXX you, Call. morning, Ena. everyone, Earnings for Universal's Fourth Good joining Quarter and

results weak service continue freight once comprehensive solutions us Universal's backdrop, to logistics industry. again diverse transportation have performance. in our the and how . driven Against demonstrated set Our offerings apart the exceptional persistently logistics

our want and in enables maintain to logistics foundation incredible employees I customers a of team of Before moment entire and the the consistently delving details, the are into each industry. XX,XXX-plus position acknowledge to of take member us a efforts as transportation our It Universal to the our that and the leader our contractors and success. team. hard the of deliver is commitment The dedication work to outstanding services

the Universal with results let's X.X% Now XX% earnings delivered margin We fourth in by quarter per solid the operating in $X.XX. and quarter. top revenues of XXXX. our discuss grew line share once again

in For the per XXXX, the $X.XX $X.XX reported in share, XX% Universal's full in financial and margins making Universal revenue, XXXX performance full second operating best billion in year earnings history.

Universal's While to vary results with performance, I'm across pleased continue overall reporting segments.

double-digit Our contract success. logistics and margins operating achieving as standout to serving cornerstone be consistently business our continues performer, the of a

over remains Despite driving X in delivered results. our truckload also ongoing has highest heavy-haul demand segment strong its operating trucking specialized robust, in Trucking business weakness for Our years. market, to wind margin the

continue. this momentum We to expect

quarter are focused The cost our are expectations and reducing our the segment -- on straight was Intermodal of remains results. performing improving our a positive EBITDA efficiencies been that from said, effective. indicating Intermodal quarter yielding contributions second efforts below segment, we control highly the However, have and fourth efforts costs challenge,

we progress by far. be have still done, work the there I'm to is made While encouraged so

from development XX.X% includes Logistics which of acquisition Parsec specialty programs, At programs in fourth completed terminals our XXXX. Universal value-added the up was $XXX.X our Contract managed XX end in million. increased quarter. segment, quarter This XX revenues rail project, from of new the In XXXX, QX QX the to from revenues $XX.X XX million including during

in Contract segment. our operating Logistics of was market-leading We terminal XXth ratios I'm acquisition quarter a [indiscernible], remains real and very recent below allowed lift XX%. revenue history most The the with provide consistent volume build services. profitable continue provider This cross-sell acquisition to pleased services. other of highest of relationships new of and straight COVID. our of management performance the Parsec QX its in its will had opportunities since our its has highest Universal on to customer

quarter, XXXX. weekend with acquisition synergies a with truly Logistics Universal fewer transformational and this Contract $X.X performance pleased over and did be annual Parsec in going revenue extremely the The forward. of fourth industry in to for slight segment there segment optimistic to automotive and run downturn our cautiously plans We early for less further the billion. rate are the remain recognized We're see work. the on We operating believe shifts acquisition was brings

SAAR expected However, with XXXX $XX similar expected XXXX, elevated are be volumes to around to the remain million. to

be to similar XXXX. Class to XXXX X expected and also are volumes

which investments A results. by to and $XX.X paying is XXXX the continues in of despite equipment a due Our and drop We key been haul challenging our to XX.X% environment. loads excluding fuel primarily Revenues per was transportation revenue haul. partially increased million, haul XX.X% has heavy surcharges. offset wind Trucking large heavy XX% outstanding XXXX, our made specialized dividends. the driver performance in our it of in business, deliver This to segment performed very in well increase load, strength

also which basis XXXX, operation, an contribute of company expect turning We of improving well. operating into an managed to it the and agent operations further as a quarter on of wind we annualized EBITDA third margins our the additional in acquired $X million

Looking heavy revenue long-term trucking for XX.X% helping prior the inflation significant haul year. growth broader has made in it compared revenue in truckload our specialized XXXX to Trucking business potential, ahead, our the stability the Specialized wind market. from insulate and providing XX.X% of segment segment up in

trucking overall continue existing customers specialized deepen we We our to to relationship the broaden expect a coming percentage rise business years. and our our as to segment continue base in of with as customer

the capping a challenging decreased Intermodal quarter, The rates QX In decrease revenues Compared XXXX, to had Intermodal decreased to XX.X% segment $XX.X X.X%. year. a segment, very while experienced million. difficult segment in Intermodal another year-over-year volume, XX.X% our

Additionally, throughout revenue Volume leading is fuel for decreased and surcharge rates have this relatively XXXX, been $X.X believe million. bottom to segment. us the stable this

rate transforming are environment operation turnaround and a the We this more segment strong improves. into once leaner, positioned volume for efficient

sales that new key a have capturing shippers to intermodal target with matter. team a markets in We the on markets in in volume intermodal share focus more brought

value we about strong robust This over disciplined us success sales competencies objectives. focus allowing and filled with deliver that the while in pipeline enterprise, to on to million. with are positioned long-term continuing well for our pipeline opportunities exceptional us we to enabled are By this our align the $XXX clients. strategy, approach, Across totaling to be margin excited promising core our opportunities strategic maintaining

crucial our dedication to success. the performance like I'm full employees. fourth to continuing hard Universal. XXXX. customers thank to the their want to gratitude I year both to our of for express quarter I'd in put our our this in and opportunity trust my to also take work, proud are incredibly Their

rest look of XXXX about we and remain the optimistic ahead, in future. I our confident As

financials Jude? turn now provide upcoming and Jude will I our to expectations the call for to quarters. color on over

Jude Beres

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

increased during $XX.X last EBITDA the same compares million to which to million period $XX.X $XX.X year. million

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

operations fourth operating XXXX. to revenues. $XX.X the our $XX.X of segment fourth income compares value-add of logistics operating of total for which contract dedicated million from quarter the XXXX million on at $X million This on includes total revenue $XXX.X and Looking performance segment, to of Income million million our in increased $XXX.X businesses, operating transportation of our quarter in

for related points. this of was quarter operating which of the segment depreciation the Operating X amortization $X total were lowered revenues in to operating and by quarter XX.X% results compared year earlier. margin million margins to XX.X% contract logistics XXX the basis fourth Included Parsec, in operating XXXX

quarter revenue During program recognized development $XX.X the of during million of specialty completed XXXX, our operating period. we fourth and the additional an

versus Operating to of and million. quarter segment. program same On to loss The program the total in $XX.X fourth were last we $XX.X operating reported revenues value-added XXX.X% from the to in included million full segment. this expense. decreased loss to million services our an million year last million in $XX.X to [indiscernible] $XXX results Intermodal ratios and of program XXX.X% were on XXXX, supplies decreased the the operating operations generated this costs operating year. the of This Revenues Contract of $X million. income in For $X.X of Logistics compared were compares recognized period year. million And from operating $X.X revenues Operating for XXXX. in an quarter the our

This to heavy $X.X margins XXXX. in income million In quarter specialized wind increased $XX.X from the in $X.X reflecting our quarter revenues compared for operating segment, compares strong Operating to year of quarter for million $XX.X last million. results operations were versus increased our million $X.X million same Trucking haul in to quarter million $X.X X.X%, the the X.X% the business. fourth to and

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

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

capital were $XXX.X year expenditures million. totaled XXXX, the full For

For billion $X.X the total year XXXX, full and operating operating X% to to expecting the are $X.X we revenues billion in X% range. margins between

the expecting and expenditures strategic capital XXXX, For in range be million million $XX year to to purchases $XX of come the before in are to expense any interest between And real $XXX $XXX full estate. we million million. also of

$XXX With amortization to ahead. we million, recent increases to range. EBITDA operating QX will Universal's on more of interest performance top quarter operating in related the first of line between believe in revenues $XXX and for expecting XX.X% cost the become our we borrowings, EBITDA measure X.X% For and are the in in associated million be XXXX and the margins acquisitions will XXXX, range. the meaningful as depreciation of well to expense XX.X% a margin XXXX in years X.X% as and

in guidance development in for customers' was down softness with includes in depreciation and segment, of Intermodal previously our to XXXX, specialty the items. amortization the expectations completed the operating specifically Southern Number recent additional roll-off tick margin expenses, headwinds acquisitions, X that expense increase the our The California. discrete quarter, automotive program is first continued due in one, and mentioned our in production

related potential policy. will in or specific or nor current Our reflecting classification any the reform, impact negatively our independent on guide business level quarter results tort either rules in our either regulatory changes our guide federal operations Mexican changes either changes at future policy or the includes update any of positively. to We'll that tariffs each tax our or policies Canadian positive to on in impact contractor impacts negative

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

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

Operator

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

J. Bruce Chan

visibility from know there's automotive Maybe top. on lot pretty the flow and good just side been of OEM I production. into a guys starting get the you some usually news

scenarios But we see I But there? the the there. could hard Would we of to just say. thanks tariff if on are like XXXX and far about scenario look maybe customers maybe risk as early Canada that worst-case saying Mexico. scenario your maybe us as could the different know think and address color kind to a here? And plant quantify [indiscernible] closures, you where it's if what So a for just help

Jude Beres

I'll Bruce, start.

million is of $XX.X of $XX Mexican annual first sales, just is only So and south of all, Canadian our about million. our business business

So the right? there I to big, Universal's from tariffs some exposure very when they So mean, X% think strikes of I foreign to to lot -- guide. That during of supply were Mexico. X.X% in challenges when come XXXX in happened overseas -- said, in around being either there's chains Mexico, a that from not is our or or similar components what's

don't been that I that the think us border I now. could would definitely any given those think right there at into expect challenges about components, impact don't us, although on really tariffs insight that of specific any really So have or but there's as we I items guidance relate specific to is it to if challenges any

Tim Phillips

Tim. with is this Bruce, Yes, agree that. would I

we that said. our what something mean in this a happen. everything feel but Jude our have shown I really just Mexico. real with conversations now of customers guidance, and comfortable There's positioned have is right play long-term if should we been no All

truly Mexico. also chain But capture able We the a out. the years. happened We It be continue will build of network. positioned positioned supply an supply standpoint going to on what's of chain, global chain from global it the to a think we're global the different do import It's network. in nearshoring. continue to be right, depend supply autos is what to both the of drayage over global brands a that's on side And part we're that we be and think to

J. Bruce Chan

in just a really with logistics sticking from just like perspective. That's bit the more it typically that you to a margins maybe year. it it's this pronounced so bit of guys, But know I little see QX helpful. I know I Okay. little degradation not appreciate QX. looks seasonal you was here. But contract

do to Parsec just help way how much what would was out you to could think structural you mix from segment maybe parse be that the PARSEC? So about And on of the going maybe the us like margin -- from forward? impact right

Jude Beres

Yes, for sure.

historically bought is One that of that between operating had margins. start company things. factoring the the when couple accounting the in a just Parsec, purchase But X% So we XX% and you to costs, related to purchases. million to on GAAP, that's amortization about of layer the other some in intangibles it's equipment of going $X additional amortization required $X and for million specifically

that So down bought for going X to to we X. to that GAAP X like XX is to margin it go

So to that a we're Bruce, because more, going we just EBITDA operating start from talking little will hit accounting purchase away going that's reflection reasons a we buying companies shy bit to our are because one there's much because better of the about margin. be believe really a great EBITDA to not

from impact would operating dedicated you to And that. larger to in fixed started tractors also, was we transportation and and of shifts group, X associated from seeing in getting And some Bruce, I started not you're little is be that those we So if on margin say of a in of costs going all to out days the then what assets X, degradation. piece had a going our just Parsec X seeing so have X dedicated the X trailers. plants bit utilization that really because there's especially quarter with QX, that margin

around may story autos I the think, QX. that what be that very although mid- gangbusters just as XXXX, ramp-up like for a which in a be really guided, in XX more million SAAR It you're would off year looks to aware, happened So similar starting late XXXX. have to

J. Bruce Chan

back And queue. the it one before Okay. really hop Got and then over it. just That's helpful turn in also I maybe color. more

you side, degradation the improvement, you specific the a I into segment of you're path in progress what as in bit On of XXXX? . the if kind changes, think challenges looks to there. obviously, some but and like [indiscernible] especially could little insight just about making kind know give the intermodal continued to us some more drivers what or outsized were the path the of

Tim Phillips

Intermodal you highlight a couple can all is things and of of the success. Sure. profitability sure as because we on a division Well, points our been that I to that's focal to make want to put imagine, path

segment mean we and approach looked So into plan top-down from the a we approach us top-down think this to new being where brought accelerate need and some leadership it at help to would be. we better

sales in want as that on And the a included in large we as leadership executive of customers a different also increase We in that our United the kind new attack sales rationalized well States. we to force. where

to feel point and into we positioned about where really So customers good are deals. we being close our with going XXXX and sell from able touch new and evaluate a

with we customers of our well a visibility as conjunction needed In for new that, our level we thought employees. as

clear give in better will where to some a over So chain. out be that roll we're customers our position new year people our intermodal instituting technology supply XXXX successful to the is freight look to their at the

so get about excited for also a we're There's to at lifting So position a things full crack these it lot XXXX. a can that. we in of all been heavy have

hard worked efficiencies, We've the specific thing California to the what And property done potentially also on our We've We've that makes sense. facilities headcount. did in So have Southern The subleasing. it be is some -- we've right? where consolidated rationalization. we we rationalized in really should we've at pretty looked we leases. other rationalized

centralization efficiencies with our and how we our for of that sure customers unit, those conduct see when our additional conjunction to the our we be with In the business investing to of a particular California in commitments, solid have foundation with are we Southern intermodal from in we'll a and drivers. want that interface make future, growth. rest we We and process make interfaces the that looking

that. report see of our out quarters we'll to continue of And climb that in So we as the you'll coming results the on with successes that.

the is have very a rating not, competitive tell full now approach of team to sure has And on the although full, customers rationalized intermodal but funnel competitive facilities. out, And really this and just network. think side first into of we the we been the what some ready -- hopper we we make how the very consolidated we it's the do market in be California very good for of think uplift. because fill you capacity volume walked on basket standpoint. we pipeline. biggest to position that freight. big still being a the that is costs have We've additional quarter optimized a There's on to And challenge, need had in I be environment. out that's our aggressive falling the And a to competitive Southern some capacity to continue with We've it's add beyond thing. we We're from as we'll

to we So exponentially type that, progress some in States, California, as that we relieve but only of the Bruce. start itself not we'll see to see that see opportunity out start of United legs you'll some make continued around and grow Southern we'll

J. Bruce Chan

Okay. to see Great. need in that is market to get upward any do the to that? the you Or environment further now order right conducive And demand inflection done? in

Tim Phillips

truckload in and dynamic truckload the also to it degree of much that environment of and addressed capacity up up being type more intermodal say going hand, opens on network. somewhat market on flat, seeing things, the throughput on would right? and truckload has optimistic the couple think bids additional of I'm the been additional not freight. sector. hand that some And for and but if sometimes and intermodal I'm We're to some picks intermodal for at takes I opportunities also that capacity seeing a We're rate, a I capacity opportunities optimistic any X as those or also shifts

now of climb rates a in seen think prepared it's -- and So matter just -- my I how we the we've I out remarks, don't I I said still it. somewhat think of like bottom are the

Remember, Year. XXXX part the encompass will or New XXth first the Chinese the February of was

we February coming. So some It's softness of just after how end we that. out and will of it that's we'll see March know in the climb

I additional So we some as expect into opportunities we come. second see should quarter, get

Operator

have a Instructions] from [Operator We Stifel. Chan question Bruce from follow-up

J. Bruce Chan

right. questions Well, Great. of the All second It got of apple. plenty here. bite I've sort

Just related first the demand into up Any related stick demand the of side, fourth core could of into more recovery that project part the nice think was trucking or that 'XX? quarter. little you whether in a bump or that quarter is on sense around the early

Tim Phillips

both quarter especially demand But we by driven comment fourth was the wind in Yes, could on the this. probably the division.

see provide of on fact the the We're sure effort of because a and continue effort wind putting newest the quarter into to the a we're invested stay their putting that far effort make We so into first of lot it. we customers see to we're see equipment stay to the and opportunities freight. of the customers with based We've to that a to also sure I current environment. fact a execution equipment putting piece specialized our make and in seen lot we've in the move better lot bit truckload little lot freight a that connected with the we the of continue. being

other is had point coming the with seen happy rates we're a to bids specialized review. drag and . We've real we've the But truckload the the than promising in opportunity we've on van seen your in still on standard that flatbed. increase a that. good the So on

in activity of first has up bid X the or the the year. X So picked weeks

J. Bruce Chan

Okay.

risk from does seem you're business as changes at that some as Or this that the and point? regulatory a there okay from of what customers? wind to So is hearing far policy

Jude Beres

that operating operate on federal the executed it okay. that the are Bruce, were we are the currently to now, related land. projects normally seems Most land and on of XO Right not and federal projects President by specifically

any So right don't now, expect really we impact.

Tim Phillips

Yes.

this let -- projects It's a X civil remember, said. or just it. a these from exactly has environment planning X to a standpoint. of me me to years dynamic customer that year some that started private Let that standpoint, from connotation add ago, upstream Jude what begin some And

at there's now. it So effort extinguished time to and the of level lot it's been to a get

there, and continue competitive be service feel and we the So the just clear continue trajectory customer to a somewhat get have we to need what's we on to out awards. to

expand The other thing base the customer a on on put push really I specialized would to say, our side. we

that our initiative So be diversify key is customers of portfolio. expand expertise this to into year to will one the other

J. Bruce Chan

one on remind picked just was a Okay. here. to costs you then mentioned there I was rationalization operating us can in then side. bit Personnel into tied of here, the some other Jude, goes Great. head expense line, intermodal And on? final just else one up And know bucket? count the something on what just [indiscernible] you that going expense that

Jude Beres

for Yes, sure.

Parsec. Bruce. was So no, related specifically you're That to absolutely right,

of you remember, about new Parsec If union. X,XXX-ish X,XXX in employees, brought which are what,

plates of has related also contract expense and our things business. the number So those XX% to specialty in legacy That's our along change program one, couple very course and that development development operating of the expense we our other lines. in similar It's . that operating -- that that license throughout was to program. of the a and But -- contract And like like specialty the specifically year. line, to expenses where permits to the fuel logistics line through then related things. have general ran the our transportation

Operator

hand will questions Tim further any to Phillips no remarks. are There call you. at now this Mr. for closing I time. the Thank back

Tim Phillips

Thank you.

and strategic take who on it a taken and approach there. we will want to to have We get what be thoughtful

allow earnings us our in high a support offers QX value to our you, forward truly chain. up will shareholders believe our integrate stickiness, We look Thank customer-centric I of which April. have a to to support late customers' ultimately builds long-term this our our in a a call and on deep and catching employees. level approach of level that segments in on and supply focus providing We customers

Operator

Thank today's concludes And you. Thank you call. participating. for this

disconnect. all may You

Universal Logistics (ULH) 7 Feb 252024 Q4 Earnings call transcript