Universal Logistics Holdings’ first-quarter results showed year-over-year (y/y) decreases in its trucking, intermodal and managed brokerage segments, while the company’s total revenue increased 12.5% to $491.9 million.
“The first quarter was certainly a challenging environment for our transactional transportation business, but overall, I’m extremely pleased with our results,” CEO Tim Phillips said during an earnings call with analysts on Friday. “This was the best earnings-per-share and operating margin for any quarter in Universal history. In the contract logistics segment, revenues increased 48.4% y/y to $313.5 million. This was largely due to a recent program award that ramped up in the first quarter and will be completed by the end of 2024.”
Warren, Michigan-based Universal Logistics (Nasdaq: ULH) provides truckload, brokerage, intermodal and dedicated services in the U.S., Mexico, Canada and Colombia.
First-quarter earnings per share came in at $1.99, a 109% y/y increase.
Universal Logistics surpassed Wall Street expectations for revenue and EPS in the quarter, which estimated revenue of $416.50 million and EPS of 73 cents.
In the trucking segment, first-quarter revenue decreased 12.6% y/y to $69.7 million, compared to $79.7 million for the same period last year. During the first quarter, Universal moved 41,691 loads compared to 44,855 loads during the same period last year, a 7% decline.
Average operating revenue per load, excluding fuel surcharges, decreased 6% y/y to $1,508 in the first quarter. The average length of haul increased 1% y/y to 401 miles in the quarter, while the average number of tractors decreased 7% y/y to 830.
“We expect to see a significant uptick later in the year in our specialized truckload business, which has a full book of business for the rest of the year,” Phillips said. “Flatbed volumes were still negative year over year but are showing some signs of life. With the flatbed market in expansive territory, we await better volumes as the year progresses.”
Phillips was also optimistic that Universal Logistics could garner more work from OEMs over the next several quarters.
“As the OEMs are under pressure, some are altering or even reevaluating their electric vehicle transition plans, while addressing labor cost pressures,” he said. “The wage inflation we’re seeing in the auto sector could lead our customers to seek more outsourcing opportunities utilizing Universal’s lower-cost, high-service solutions. We’re already beginning to see this. We have several new contract logistics programs launching in the back half of 2024 and the beginning of 2025.”
The company’s first-quarter intermodal revenue decreased 30.9% y/y to $76.7 million. Intermodal load volume declined 14.1% y/y 105,037 loads. Average revenue per load decreased less than 1% y/y to $566, while the number of tractors in the segment decreased 17% y/y to 1,758.
Universal Logistics’ first-quarter operating revenues in the company-managed brokerage segment decreased 8.7% y/y to $31 million.
Jude Beres, Universal’s CFO, said the new program the company launched in its contract logistics segment will help full-year revenue.
“For the full-year 2024, we expect to recognize total operating revenues on the program of approximately $228 million, of which $95.3 million, or approximately 42%, was recognized in the first quarter of the year,” Beres said.
Universal Logistics’ full-year capital expenditures are expected to be in the $315 million to $330 million range and interest expense to come in between $26 million and $28 million.
For the second quarter of 2024, the company is expecting top-line revenue between $450 million and $475 million and operating margins in the 9% to 11% range.
Universal Logistics declared a cash dividend of 10.5 cents per share of common stock on Thursday. The dividend is payable to shareholders of record at the close of business on June 3.
Despite challenges in the freight market, Phillips remains optimistic about the company’s strategy.
“Our transactional transportation business has been experiencing ongoing volume and rate pressures. Pricing remains extremely competitive, and shippers are taking advantage of the current market conditions,” he said. “On the positive side, we’re hearing some optimistic sentiments from our customers regarding the back half of the year. Although we haven’t seen the start of the turnaround, we believe we’re at the bottom of the cycle.”