Universal Logistics Holdings Reports Fourth Quarter 2023 Financial Results; Declares Dividend
- CEO Tim Phillips acknowledged the challenging freight environment and labor strikes affecting Universal Logistics Holdings, Inc.
- Universal reported a net income of $21.4 million for the fourth quarter of 2023, a decrease from $33.4 million in the same period in 2022.
- Operating income decreased to $34.1 million in the fourth quarter of 2023, compared to $48.2 million in the same period in 2022.
- Earnings per share for the fourth quarter of 2023 were $0.81, a decline from $1.27 in the fourth quarter of 2022.
- Universal's contract logistics segment performed well, while the intermodal and trucking segments experienced declines in operating revenues.
- The company declared a quarterly dividend of $0.105 per share for common stockholders.
- Universal's Board of Directors announced cash and cash equivalents of $12.5 million and $10.8 million in marketable securities as of December 31, 2023.
- Operating revenues, income, and earnings per share all saw significant decreases in the fourth quarter of 2023 compared to the same period in 2022.
- The intermodal, trucking, and company-managed brokerage segments experienced declines in operating revenues and income.
- Universal's debt at the end of the fourth quarter of 2023 was $386.4 million, with capital expenditures totaling $48.5 million.
- The company's operating margin decreased across various segments, indicating challenges in profitability.
- Load volumes and average operating revenue per load decreased in the intermodal, trucking, and company-managed brokerage segments.
Insights
The reported decrease in operating revenues, operating income and earnings per share (EPS) for Universal Logistics Holdings, Inc. in the fourth quarter of 2023 indicates a contraction in the company's profitability. The significant decline in EPS by 36.2% is particularly concerning as it reflects a substantial reduction in the company's net income relative to the number of shares outstanding. This contraction may be indicative of broader industry challenges or company-specific operational inefficiencies. The reported operating margin contraction in the intermodal and trucking segments, with the intermodal segment operating at a loss, suggests that these areas of the business are facing heightened pressures, potentially from increased competition or cost inflation.
Investors should note the company's second-best full-year financial results despite the downturn, which could signal resilience in the face of industry headwinds. However, the reliance on the contract logistics segment for positive returns might raise concerns about the diversification of the company's revenue streams. The dividend declaration, while a positive signal of returning value to shareholders, should be evaluated in the context of the company's overall financial health, including its cash position and outstanding debt.
Universal's performance in the contract logistics segment, with a slight decrease in operating revenues but an increase in operating income, suggests a strategic strength in this area. The improvement in operating margin within this segment, despite a decrease in fuel surcharges, indicates effective cost management or value-added service differentiation. The increase in managed value-added programs from 63 to 71 could be seen as an expansion of services that may provide a buffer against market volatility. However, the trucking and intermodal segments' revenue declines and shrinking margins reflect more significant industry trends, such as shifts in freight demand or pricing pressures, which could be exacerbated by external factors like labor strikes mentioned by the CEO.
The company's emphasis on operational efficiencies and a robust pipeline in the contract logistics segment going into 2024 suggests strategic initiatives aimed at mitigating the downturn experienced in other segments. The mention of North American automotive and Class 8 production as positive outlooks could hint at sectoral dependencies that may either pose risks or offer opportunities for growth, depending on market trends in these industries.
The reported financial figures from Universal Logistics Holdings reflect macroeconomic influences on the transportation and logistics industry. The contraction in revenues and income across several segments could be symptomatic of a broader economic slowdown, impacting freight volumes and pricing. The intermodal segment's performance, with a significant revenue decrease and operating loss, may indicate modal shifts in transportation or price sensitivity among shippers. The reduced average operating revenue per load, excluding fuel surcharges, suggests that the company might be facing competitive pressures on pricing or shifts in customer preferences.
The company's financial resilience, despite these challenges, could be partly attributed to the broader economic context, including the strength of specific sectors such as automotive production. The CEO's forward-looking statements about improving freight conditions and operational efficiencies could be seen as an optimistic outlook on economic recovery or stabilization. However, the high level of outstanding debt relative to cash and cash equivalents raises questions about the company's leverage and financial flexibility in navigating potential future economic uncertainties.
- Fourth Quarter 2023 Operating Revenues:
$390.9 million 14.8% decrease - Fourth Quarter 2023 Operating Income:
$34.1 million 29.2% decrease - Fourth Quarter 2023 Earnings Per Share:
$0.81 36.2% decrease - Declares Quarterly Dividend:
$0.10 5
In the fourth quarter 2023, Universal's operating income decreased
"As we close out 2023, I am exceptionally grateful for the talented group of individuals who led us through a turbulent year in the transportation and logistics space," stated Universal's CEO Tim Phillips. "Navigating a difficult freight environment and in the face of prolonged labor strikes at some of our largest customers, Universal still reported its second best full-year financial results in company history. Our contract logistics segment led the way producing exceptional returns during each quarter of 2023. And although underperforming compared to our expectations, I am encouraged to see sequential improvement in both our intermodal and company-managed brokerage segments in the fourth quarter 2023."
"We have some work to do in 2024," Phillips continued, "but I am confident in our team and our business model. We have a robust pipeline in our contract logistics segment, and the outlook for North American automotive and Class 8 production remains strong. While we await some relief in overall freight conditions and look for opportunities to improve operational efficiencies, I anticipate the continued strong demand in our contract logistics segment positions us well for a solid 2024."
Segment Information:
Contract Logistics
- Fourth Quarter 2023 Operating Revenues:
$201.3 million 2.0% decrease - Fourth Quarter 2023 Operating Income:
$32.1 million 15.9% operating margin
In the contract logistics segment, which includes our value-added and dedicated services, fourth quarter 2023 operating revenues decreased
Intermodal
- Fourth Quarter 2023 Operating Revenues:
$85.4 million 30.6% decrease - Fourth Quarter 2023 Operating (Loss):
$(0.9) million
Operating revenues in the intermodal segment decreased
Trucking
- Fourth Quarter 2023 Operating Revenues:
$75.2 million 15.5% decrease - Fourth Quarter 2023 Operating Income:
$2.5 million 3.3% operating margin
In the trucking segment, fourth quarter 2023 operating revenues decreased
Company-managed Brokerage
- Fourth Quarter 2023 Operating Revenues:
$28.1 million 29.1% decrease - Fourth Quarter 2023 Operating Income:
$9 thousand 0% operating margin
Fourth quarter 2023 operating revenues in the company-managed brokerage segment decreased
Cash Dividend
Universal Logistics Holdings, Inc. also announced today that its Board of Directors has declared a cash dividend of
Other Matters
As of December 31, 2023, Universal held cash and cash equivalents totaling
Universal calculates and reports selected financial metrics not only for purposes of our lending arrangements but also in an effort to isolate and exclude the impact of non-operating expenses related to our corporate development activities. These statistics are described in more detail below in the section captioned "Non-GAAP Financial Measures."
Conference call:
We invite investors and analysts to our quarterly earnings conference call.
Quarterly Earnings Conference Call Dial-in Details:
Time: | 10:00 a.m. Eastern Time |
Date: | Friday, February 16, 2024 |
Call Toll Free: | (877) 270-2148 |
International Dial-in: | +1 (412) 902-6510 |
A replay of the conference call will be available through February 23, 2024, by calling (877) 344-7529 (toll free) or +1 (412) 317-0088 (toll) and using encore replay code 9789883. The call will also be available on investors.universallogistics.com.
About Universal:
Universal Logistics Holdings, Inc. ("Universal") is a holding company that owns subsidiaries engaged in providing a variety of customized transportation and logistics solutions throughout
Forward Looking Statements
Some of the statements contained in this press release might be considered forward-looking statements. These statements identify prospective information. Forward-looking statements can be identified by words such as: "expect," "anticipate," "intend," "plan," "goal," "prospect," "seek," "believe," "targets," "project," "estimate," "future," "likely," "may," "should" and similar references to future periods. Forward-looking statements are based on information available at the time and/or management's good faith belief with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. These forward-looking statements are subject to a number of factors that may cause actual results to differ materially from the expectations described. Additional information about the factors that may adversely affect these forward-looking statements is contained in Universal's reports and filings with the Securities and Exchange Commission. Universal assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws.
UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Condensed Consolidated Statements of Income (In thousands, except per share data) | ||||||||||||||||
Thirteen Weeks Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Operating revenues: | ||||||||||||||||
Truckload services | $ | 46,015 | $ | 54,044 | $ | 213,874 | $ | 230,696 | ||||||||
Brokerage services | 58,132 | 76,092 | 244,024 | 368,880 | ||||||||||||
Intermodal services | 85,426 | 123,077 | 374,667 | 591,946 | ||||||||||||
Dedicated services | 85,541 | 83,039 | 343,543 | 324,589 | ||||||||||||
Value-added services | 115,806 | 122,470 | 486,031 | 499,345 | ||||||||||||
Total operating revenues | 390,920 | 458,722 | 1,662,139 | 2,015,456 | ||||||||||||
Operating expenses: | ||||||||||||||||
Purchased transportation and equipment rent | 127,779 | 179,197 | 571,213 | 847,414 | ||||||||||||
Direct personnel and related benefits | 130,775 | 130,297 | 542,779 | 520,263 | ||||||||||||
Operating supplies and expenses | 40,643 | 44,554 | 170,994 | 177,440 | ||||||||||||
Commission expense | 7,221 | 8,876 | 31,370 | 40,288 | ||||||||||||
Occupancy expense | 11,195 | 10,941 | 44,301 | 41,286 | ||||||||||||
General and administrative | 12,872 | 12,542 | 51,839 | 48,924 | ||||||||||||
Insurance and claims | 6,368 | 5,825 | 27,163 | 22,749 | ||||||||||||
Depreciation and amortization | 19,975 | 18,324 | 77,036 | 76,657 | ||||||||||||
Total operating expenses | 356,828 | 410,556 | 1,516,695 | 1,775,021 | ||||||||||||
Income from operations | 34,092 | 48,166 | 145,444 | 240,435 | ||||||||||||
Interest expense, net | (6,163) | (5,313) | (22,753) | (16,156) | ||||||||||||
Other non-operating income | 722 | 1,467 | 1,608 | 1,143 | ||||||||||||
Income before income taxes | 28,651 | 44,320 | 124,299 | 225,422 | ||||||||||||
Provision for income taxes | 7,239 | 10,874 | 31,398 | 56,790 | ||||||||||||
Net income | $ | 21,412 | $ | 33,446 | $ | 92,901 | $ | 168,632 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.81 | $ | 1.27 | $ | 3.53 | $ | 6.37 | ||||||||
Diluted | $ | 0.81 | $ | 1.27 | $ | 3.53 | $ | 6.37 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 26,284 | 26,278 | 26,284 | 26,469 | ||||||||||||
Diluted | 26,301 | 26,311 | 26,308 | 26,489 | ||||||||||||
Dividends declared per common share: | $ | 0.105 | $ | 0.105 | $ | 0.420 | $ | 0.420 | ||||||||
UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Condensed Consolidated Balance Sheets (In thousands) | ||||||||
December 31, | December 31, | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 12,511 | $ | 47,181 | ||||
Marketable securities | 10,772 | 10,000 | ||||||
Accounts receivable - net | 287,947 | 350,720 | ||||||
Other current assets | 49,851 | 51,751 | ||||||
Total current assets | 361,081 | 459,652 | ||||||
Property and equipment - net | 565,480 | 391,154 | ||||||
Other long-term assets - net | 326,962 | 352,872 | ||||||
Total assets | $ | 1,253,523 | $ | 1,203,678 | ||||
Liabilities and shareholders' equity | ||||||||
Current liabilities, excluding current maturities of debt | $ | 189,727 | $ | 221,598 | ||||
Debt - net | 381,924 | 378,500 | ||||||
Other long-term liabilities | 149,674 | 156,650 | ||||||
Total liabilities | 721,325 | 756,748 | ||||||
Total shareholders' equity | 532,198 | 446,930 | ||||||
Total liabilities and shareholders' equity | $ | 1,253,523 | $ | 1,203,678 | ||||
UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Summary of Operating Data | ||||||||||||||||
Thirteen Weeks Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Contract Logistics Segment: | ||||||||||||||||
Average number of value-added direct | 5,582 | 5,121 | 5,521 | 5,079 | ||||||||||||
Average number of value-added full-time | 205 | 1,153 | 450 | 1,323 | ||||||||||||
Number of active value-added programs | 71 | 63 | 71 | 63 | ||||||||||||
Intermodal Segment: | ||||||||||||||||
Number of loads | 118,553 | 116,475 | 473,569 | 552,398 | ||||||||||||
Average operating revenue per load, | $ | 549 | $ | 685 | $ | 563 | $ | 702 | ||||||||
Average number of tractors | 1,830 | 2,333 | 2,034 | 2,223 | ||||||||||||
Number of depots | 9 | 9 | 9 | 9 | ||||||||||||
Trucking Segment: | ||||||||||||||||
Number of loads | 43,468 | 45,233 | 178,036 | 199,712 | ||||||||||||
Average operating revenue per load, | $ | 1,673 | $ | 1,831 | $ | 1,738 | $ | 1,807 | ||||||||
Average number of tractors | 828 | 898 | 877 | 899 | ||||||||||||
Average length of haul | 399 | 422 | 390 | 403 | ||||||||||||
Company-Managed Brokerage Segment: | ||||||||||||||||
Number of loads (a) | 18,805 | 21,979 | 75,110 | 90,432 | ||||||||||||
Average operating revenue per load (a) | $ | 1,419 | $ | 1,684 | $ | 1,496 | $ | 1,893 | ||||||||
Average length of haul (a) | 563 | 613 | 607 | 598 | ||||||||||||
(a) Excludes operating data from freight forwarding division in order to improve the relevance of the statistical data | ||||||||||||||||
UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Summary of Operating Data - Continued (Dollars in thousands) | ||||||||||||||||
Thirteen Weeks Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Operating Revenues by Segment: | ||||||||||||||||
Contract logistics | $ | 201,347 | $ | 205,509 | $ | 829,574 | $ | 823,934 | ||||||||
Intermodal | 85,426 | 123,077 | 374,667 | 591,946 | ||||||||||||
Trucking | 75,168 | 88,991 | 333,211 | 392,639 | ||||||||||||
Company-managed brokerage | 28,088 | 39,596 | 119,741 | 200,536 | ||||||||||||
Other | 891 | 1,549 | 4,946 | 6,401 | ||||||||||||
Total | $ | 390,920 | $ | 458,722 | $ | 1,662,139 | $ | 2,015,456 | ||||||||
Income from Operations by Segment: | ||||||||||||||||
Contract logistics | $ | 32,079 | $ | 30,137 | $ | 127,752 | $ | 118,437 | ||||||||
Intermodal | (944) | 11,114 | 1,297 | 83,640 | ||||||||||||
Trucking | 2,488 | 5,743 | 17,258 | 27,564 | ||||||||||||
Company-managed brokerage | 9 | 897 | (2,221) | 9,993 | ||||||||||||
Other | 460 | 275 | 1,358 | 801 | ||||||||||||
Total | $ | 34,092 | $ | 48,166 | $ | 145,444 | $ | 240,435 | ||||||||
Non-GAAP Financial Measures
In addition to providing consolidated financial statements based on generally accepted accounting principles in
In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, we are presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial measure to the comparable GAAP measure. Set forth below is a reconciliation of net income, the most comparable GAAP measure, to EBITDA for each of the periods indicated:
Thirteen Weeks Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
( in thousands) | ( in thousands) | |||||||||||||||
EBITDA | ||||||||||||||||
Net income | $ | 21,412 | $ | 33,446 | $ | 92,901 | $ | 168,632 | ||||||||
Income tax expense | 7,239 | 10,874 | 31,398 | 56,790 | ||||||||||||
Interest expense, net | 6,163 | 5,313 | 22,753 | 16,156 | ||||||||||||
Depreciation | 16,844 | 14,617 | 64,365 | 62,275 | ||||||||||||
Amortization | 3,131 | 3,707 | 12,671 | 14,382 | ||||||||||||
EBITDA | $ | 54,789 | $ | 67,957 | $ | 224,088 | $ | 318,235 | ||||||||
EBITDA margin (a) | 14.0 | % | 14.8 | % | 13.5 | % | 15.8 | % | ||||||||
(a) EBITDA margin is computed by dividing EBITDA by total operating revenues for each of the periods indicated. | ||||||||||||||||
We present EBITDA and EBITDA margin because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
EBITDA has limitations as an analytical tool. Some of these limitations are:
- EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
- EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
- Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, EBITDA and EBITDA margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and only supplementally on EBITDA and EBITDA margin.
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SOURCE Universal Logistics Holdings, Inc.
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