Q2 2021 Universal Logistics Holdings Inc Earnings Call
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Good day, and thank you for standing by welcome to the Universal logistics.
Holdings incorporated second quarter 2021 earnings conference call at this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session drastic of question. During the session you will need to press star 1 on your telephone.
Please be advised that todays.
<unk> conference is being recorded.
You require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Mr. Tim Phillips Chief Executive Officer. Please go ahead Sir.
Good morning, and thank you for joining Universal Logistics Holdings second quarter earnings call.
Start with I would like to extend the big Thank you to the hard working associates throughout the Universal family.
We have successfully navigated many of the supply chain disruptions net were prevalent throughout much of the quarter. Your efforts and of cannot fail attitude have continued to deliver strong results for our.
Customers and value to shareholders.
Walking our way out of the Covid pandemic has presented many challenges for the transportation and logistics space. However, we have we are also seeing significant opportunity both in the warehouse and on the road.
It's clear there will be a continued restocking of inventory and they are a piece of it.
It appears to be plenty of appetite by the customer.
Your efforts have bridge, these gaps, which effectively supported our customers' supply chain.
Now for the quarter.
In yesterday's release Universal reported second quarter earnings of 95 per share on total operating revenues of 400.
Third $22.8 million second quarter operating revenues reflect universal's highest quarterly revenue ever reported and exceeded our own estimates for the quarter on.
On an earnings per share basis, our results fell in line with our previously issued guidance after adjusting for non operating gains.
Top line revenue growth is the reflection of our previously mentioned contract logistics wins and a strong transportation pricing environment overall, I'm very pleased with the recovery of each of our operating segments as we lap the height of the global pandemic.
However, we are not immune to many of the challenges that the industry is current.
Currently experiencing.
While demand range remains strong for autos and class 8 trucks. The continued chip shortage a prolonged the UAW strike had a heavy duty truck manufacturer supply chain disruptions and increased launch costs kept our contract logistics group from achieving its top.
And bottom line potential as.
As we mentioned in the release contract logistics was adversely impacted by $5 million of losses associated with 1 of our recent launches we experienced staffing challenges and wage pressure in conjunction with customer production schedule, which was far lower than previously forecast our customer risks.
Per customer ramps up and out of the extended launch phase, we anticipate of proving volumes, which will translate into better results for us.
I'm cautiously optimistic on the second half will approve as chip shortages and supply chain disruptions begin to stabilize. Additionally, we continue to add our wins in the contra.
Contract logistics segment, securing an additional $22.5 million of annual business in this quarter.
We anticipate these wins to be in full run rate in Q1, and Q2 of 2022.
And many of these wins are of new customers in the industrial aerospace and EV verticals.
And our intermodal Drayage segment, we experienced 28, 6% year over year revenue increase and also saw an improvement sequentially. The.
The drayage market has been experienced some ongoing challenges the congestion at the port and rail combined with availability of equipment adversely impacted fluidity of the containerized freight.
The capacity.
To combat these challenges and further enhance our ability to recruit we have worked with our customers to increase rates. Some of these rate increases are reflected within the results, but not all on average we have increased our rates in intermodal customer intermodal customers about 14%. The second half will continue to be challenging, but we have.
Patients ourselves well with our customers to move into peak season.
Our company managed brokerage operations remain discipline and continue the balanced contractual and spot freight and of market rid of with capacity constraints and influenced by premium pricing.
While revenue was up 58% year over year.
Half of his number of loads being handled decreased by 28%.
We continue to focus on rationalizing our lanes to ensure acceptable level of profitability.
Our aim is to capture consistent gross margin and we've made significant progress, finishing the quarter north of 12% and gross margins the increased revenue.
It was driven by higher spot market rates and better contract pricing.
Currently 99, 4% of our freight is running on our new rates that would be business rated in the first half of 2021.
Looking ahead to the second half, we anticipate to reprice, approximately 21% of our brokerage business.
Our trucking segment experienced both top and bottom line growth highlighted by driver and contractor count increases the truckload group saw the average rates of our customer increased by about 3.5%.
The point out of this is in average rates are up as seen in our other company manage brokerage results this quarter 2000.
1 on experience.
A bit of of weakness in our wind energy business, excluding when our rates were actually up about 20%.
We anticipate sustained tightness in our customers' inventories and capacity throughout the industry for the near term, which continues to position us for additional rate increases with our customer.
<unk> recently received very positive outlooks for our wind customers in the second half looks robust.
Which should have a positive effect on both our top and bottom line coming into the coming into the quarters.
With ever increasing burdens for small fleets our agency base franchises continues to offer competitive alternatives.
We have 2 entrepreneurs looking to excel in the transportation industry and our efforts are paying off.
In the second quarter, our agent base Division was successful in on boarding 16, new agents.
Universal is truly a people driven company every associated significant and holds an important role on our success.
<unk> operational excellence is dependent on each team member contributing while navigating a demanding environment.
I respect the hard work and effort shown by all of the Universal team members and I. Thank you for your continued efforts.
I would now like to turn the call over to Jude Jude. Thanks, Tim Good morning, everyone Universal Logistics Holdings reported.
<unk> consolidated net income of $25.6 million or <unk> 95 per share on total operating revenues of $422.8 million in the second quarter of 2021. This compares to net income of $6.2 million or <unk> 23 per share on total operating revenues of $258 million in the second quarter of 2020.
As mentioned in the press release during the second quarter of 2021, Universal recorded a $5.7 million pre tax gain or <unk> 16 per share related to a favorable legal settlement.
Consolidated income from operations was $31.3 million for the quarter compared to $10.8 million on 1 year earlier.
During the second quarter of 2021, Universal reported all time record highs for revenue operating income as well as EBITDA.
EBITDA increased $23.6 million to $53.7 million, which compares to $30.2 million 1 year earlier, our operating margin and EBITDA margin for the second.
For 2021, or 7.4% and 12, 7% of total operating revenues these metrics compare to 4.2% and 11, 7% respectively in the second quarter of 2020.
Looking at our segment performance for the second quarter of 2021 in our contract logistics segment, which includes.
The quarter of value add and dedicated transportation businesses income from operations increased $15.2 million to $15.9 million on $154.8 million of total operating revenues. This compares to operating income of 800000 on $71.8 million of total operating revenue in the second quarter of 2020.
Operating margins for the quarter were 10, 3% versus 1% last year as mentioned in Tim's comments and our release our contract logistics business incurred a $5 million loss on the second quarter at 1 of our launches supporting on automotive OEM, we expect a similar loss in the third quarter, but moving closer.
Our breakeven as the quarter progresses.
In our intermodal segment operating revenues increased 28, 6% to $106.6 million compared to $82.9 million in the same period last year income from operations also increased $1.4 million to $6.2 million. This compares to operating income.
Close to the 1.7 million in the second quarter of 2020 operating margin for the quarter improved marginally to 5.8% in the second quarter of 2021 compared to 5.7%. During the same period last year, both driver and equipment shortages as well as the lack of port and rail fluidity continue to hamper the results of the segment.
In our trucking segment, which includes both our agent based on company managed trucking operations operating revenues for the quarter increased 58, 4% to $99.8 million compared to $63 million of the same quarter last year, while income from operations increased 84% to $6.5 million. This compares to operating income.
<unk> of $3.6 million in the second quarter of 2020.
And our company managed brokerage segment operating revenues for the quarter Rose 51, 3% to $60.4 million compared to $39.9 million of the same quarter last year, while income from operations also increased 700000 to $2.4 million.
This compares to operating income of $1.7 million in the second quarter of 2020 operating margins for the quarter were 4% versus a 343% margin last year.
On our balance sheet, we held cash and cash equivalents totaling $13.1 million and $7.9 million of marketable securities.
Outstanding interest.
As of the bearing debt net of $1.3 million of debt issuance cost totaled $432.2 million at the end of the period.
Excluding lease liabilities related to ASC 842 of our net interest bearing debt to reported TTM EBITDA was 2.3 times.
Capital expenditures for the quarter totaled 12 million.
As Tim mentioned in his comments the availability of equipment, including the procurement of new equipment has been extremely challenging as a result, we are lowering our forecasted capital expenditures now to be in the $40 million to $50 million range before any additional business wins on our contract logistics segment and strategic real estate purchases, we expect to.
The makeup for this year's equipment deficit by increasing our capital spending next year.
Interest expense for the year is expected to come in between 12 and $14 billion.
If the business environment remained stable for the third quarter of 2021, we are expecting top line revenues between 420, <unk> $450 million and operating.
In the 7.5 to 8.5 per cent range.
Additionally, while we are reaffirming our full year guide on total operating revenues between $1.6 of $1.7 billion. We are now lowering our top end 2021 expected our operating margins by 100 basis points from 7% to 9% to now between 7 and 8%.
March launch losses on our contract logistics service line as well as continued operating challenges within our intermodal business are the primary reasons, we tightened our expected operating range for the full year.
Turning to our dividend yesterday, our board of directors declared Universal's 10, 5 cents per share regular quarterly dividend. This quarter's dividend is payable.
Of the shareholders of record at the close of business on September 6.2021 and is expected to be paid on October 4.2021.
Finally in yesterday's release, Universal also announced its board of directors has authorized a new stock repurchase plan under the new plan, we are authorized to repurchase up to 1 million shares of <unk>.
On the stock in the open market.
With that Jamie we're ready to take some questions.
Thank you as a reminder to ask a question you'll need the press star 1 on your telephone to withdraw your question press the pound key the standby, while we compile the Q&A roster.
<unk> com.
The next question comes from the line of Chris Wetherbee with Citi.
Hey, guys. Good morning, James on for Chris. The first question I have really involves.
What youre seeing and how youre thinking about.
The recovery it sounds like Youre thinking about sort of the status quo or steady state from.
I'm here on out when Youre thinking about the guidance.
The results for the full year.
Wanted to get.
Get your perspective on the trends youre seeing in sort of interest seeing weakness or particular strength.
Just trying to understand sort of like your perception of risk to the upside or downside based on.
The outlook on the trends youre seeing in the freight market broadly.
Yeah, Hey, this is this is jude so yeah, we're expecting the truckload market to still be robust on the right side on the volume side.
Obviously, we're going into peak season, so on the brokerage side, we all know what that can do the capacity into rates on some constrained.
The but we're still expecting that operation to operate within.
Kind of a similar margins on what we had in the second quarter on the intermodal side I think we're bullish on a lot of the things that we've heard from our customers and the freight that we have on boarding in Q3 and in Q4 as it relates to peaks of we're expecting the.
Train additional margin out of that business in the coming quarters in the back half and then on our contract logistics business, excluding the $5 million headwind that we have had in Q2 and the $5 million headwind that we havent. The Q3 related to that singular launch loss I mean that business.
Really still performed really really well and would be at historical margin had it not been for that particular.
The launch excess launch cost. So you know of course Theres risks with everything I think we're all hearing in the news about Covid Lockdown all of that kind of stuff the mask coming back. So we really don't know.
What's going to happen there, but as far as looking at the business as it is today and projecting it out over the next 60 to 90 day, we feel pretty good about it. We just have to have some cleanup on our contract logistics business and we expect to get back to that run rate of 7 to 9 or the 8% to 9% like we were we were originally planning for the back half of this year.
Sure.
And the follow up on the point.
Around the.
Or on the margins are you seemed like wage pressure coming through at all of this year, that's impacting the margins have largely been able to pass it through or is it something that really you could probably see flowing through the results in 2022, just trying to understand that dynamic within.
Of course would be great as well.
Yeah. This is this is Tim yes, we've seen some some recent wage pressure and just related to the the launches that Jude was speaking to some of this wage pressure is with within the last 3 or 4 months.
There's been some turnover in some operations, we've been forced to go out.
In your stores, new individuals' the wages that we're having to pay or are escalating. It. It's also creating some you know some training and so on and some mentorship issues. So yeah, I see wage I see people in wages being a headwind that we will have to deal with on a basis through the second.
And for 2021, and probably into 2022 and what we're doing is we're rationalizing every every operation looking at the wages what percentage increases we feel we're going to have to pay out to get us the where we need to be to get that employee and then we will execute the plan to go back and.
Collaborate with our customers on what it's going to take to make sure. Their freight is moving through the supply chain in an efficient manner.
Got it.
As we think through that.
What is your outlook for essentially.
Startups across sort of the basically the back half of this year, but.
And in the 2022 and might slow because of the wage pressures like essentially could hiring hamper your ability to take on volume or is it really just essentially of margin headwind.
Well, Yeah, I think I think it's 2 things.
Not only think its wage pressure I also think the individually.
<unk> employees in that market that want to be in the space. So we have had some of that marketing going on to make sure. We have a pipeline of people. The other thing that plays into our potential wins and where we launched I think some of the wins that we've had over the last couple of months have been in various markets.
It's around the United States.
At some point, we had a pretty high concentration in.
They're markets that made it extremely more challenging because we were we were in a saturated market trying to find people, whereas we have branched out a little bit in different verticals the spread of surround the country I won't get you.
So do we think theres going to be problems.
Finding qualified people I mean, if the yet but I do know in the next upcoming launches we have already won we're on.
Already taken a proactive approach with the customer and with the market and trying to get ahead of that curve, because it's taking a little longer to find qualified.
The visual I think the biggest point of this where we will find some potential ERO.
Erosion of potential wins is on.
On the transportation side as we look at the availability of drivers in particular markets. We haven't shut any of the pipelines down we just been tremendously optimistic about.
How we're going to rate them to make sure that we can go to market with the right. That's respectable enough of our wage that we can pay that's going to attract what is in the market because of the market isn't overflowing with available candidates both on the road on the dock.
That makes sense of them actually.
Let me speak to the next question, which is really.
Around.
On the truckload market.
How youre thinking about the there you talked about the repricing opportunity.
Well I guess as we think about basically what you are going to be doing across the back half and potentially if you do see of normalization.
Across 2022 should we see.
On.
The significant margin expansion, assuming that essentially the truckload market starts to normalize and capacity comes back across 2022, Tricia on understand sort of like what you would expect if that werent. The case, how would you expect margins to react in 2022 relevant into 2021.
Well I don't I don't have the complete crystal.
Crystal ball for 2022, and I wish if someone does the dial in the up and give me some insight on that.
We see things pretty much as you had mentioned coming out of the second of going in and coming out of the second half of 'twenty..1 we still the rates escalating with our customers, we still see demand on the wage side of it I am pretty come.
Sort of saying that as we exit into the first quarter 2022, we're going to be in a similar situation.
I mean, I think others are probably rationalize and said that at some point in 'twenty 2.
Things will start the things will start to come back to the more of a normalized market and if things do come back to a normalized market.
Much.
The capacity on the truckload side has run through the owner operators too. So its run through of variable cost structure, which I am somewhat comfortable that as debt.
Ed It will equalize itself should we have to run through of normalized market will have to play that hand on the company truck drivers as we get there but.
Each of our 4 right now for the next the last couple of quarters going into 2022, I see sustained weight of sustained demand on on wages and I also see collaboration with customer on rate increases.
Got it and then.
Just in terms of intermodal the ability to.
Concessions.
The topic, obviously and the ability to source capacity and what Youre seeing there.
You sort of.
Sort of incremental headwinds that you could think about across the back half.
With the sort of more challenges in the us.
Just trying to understand sort of like what youre seeing relative to your own business versus.
The entire market.
Across the back half when it comes to the intermodal and capacity.
Okay, Yeah intermodal as the whole for Universal Logistics Holdings is really centered around the drayage piece of the hauling it from <unk>.
Port and rail to the ultimate customer so what we've seen in the FERC.
So at the half of the year I expect to continue to see in the second half of the year that is congestion at ports and rail that is equipment shortage with chassis in particular markets. Our continued drive to recruit owner operators and drivers and what we see and what we've seen in the past.
First of all hot markets on the van side is a lot of the we're competing against the van carriers for these drivers and contractors.
Many cases of van driver is going to make a little bit more money than the drayage drivers. So we see some defection.
It's a lot harder to recruit in these markets and then also.
Back.
We talked about labor as a whole not only on how it affects us think about how it's affecting the supply chain and customers. We're seeing an increased dwell time on on the customer and debt even adds to that equipment shortage problems. So I see those continuing to be of problem as we strive.
To get extra.
Extra amount of move.
The labor driver per day for the optimization. So the result of that Youre going to see continued pressure on getting in and out of the rail which is you've got to watch of emerge and per diem costs.
And you have of reduced utilization on your power units.
We will continue to recruit hard we have specific.
The department setup to do that and focus on drayage drivers because we are going to be more of them potentially to do the same amount of work. We did last third quarter at the same time. This is just the unfortunate truth and we want we watch the we watched the dwell times at the major port and rail and all of them.
I'm not not pointing any negative figures there towards the them.
<unk> starting to see things escalate upward we true.
The data from our own drivers of the <unk>.
We're approaching on average over an hour of halfway airports and rail and that can expand up to 4 hours, depending on what the major market. It is and how pinched it and now you're starting to see more shifts that anchor you.
But where see the flag going up in the port of La and long beach that theyre going to see a high level of volume.
We just have to be prepared for it and the other thing we're doing it's a little different maybe than most on the drayage side is we're trying to and Jude had mentioned our capex, while the back half of this year, we're focusing because we.
The start and get chassis, we're going to go out and get more chassis im not sure of the exact count yet.
It'll it'll be close to 1000 chassis that will add to our fleet already non doesn't solve the problem everywhere, but will filter of those into major markets to help our customers.
Address their supply chain problems.
And as the chassis the leasing markets still remains tight so we'll continue that strategy.
For the rest of this year and we will look at it again next year if that makes sense.
Yes, so it sounds like.
Based on how Youre, just kind of at least the chassis the at least yours.
Definitely positioned to sort of or at least.
You think youre definitely positioned to outperform sort of the broader trends in the fact that you can actually still get equipment and some level of the new you actually can still current or some level of drivers which is obviously.
The positive but is there any.
Is there anything else to be thinking of broadly or is.
Just basically comes to that.
The ability to source capacity is really just the the bill or.
Or is it really relying on those 2 aspects is there any sort of like <unk>.
Contract or anything else to be thinking of just anything beyond that would be great.
Yes, I think I think on.
On the contractor and driver and I'll be honest, it's like a fist fight you watch.
It's the every day, we come in and.
We start in some data right now we are hitting our head against the wall, but we start we start contracting using our resources, we have resources not only centrally located in corporate we have boots on the ground at all facilities.
Better out there navigating the local the local landscape and it's up to us from an operational standpoint, because I think there is going to be.
And many times, they're going to go where they're going to make the most money and not on all cases as the drayage right now so it's just going to be a fistfight and then internally we got to look at.
How we can optimize the best of our ability that's what I mean and some of the remarks.
We talk about having additional runway I still think theres. Some internal optimist optimization that we can do if it's as simple as matching imports and exports better and doing some of those things internally that allow us twist of few knocks.
But I'll tell you. This the not don't have a lot of distance to go until some of this congestion and equipment allocation.
Lighting up because we are spending a lot of time sitting without the wheels, turning on the road.
Got it alright, thank you.
Yeah.
Okay.
Commodity a question. Please press star 1 your next question comes from.
Comes from the line of Bruce Chan with Stifel.
Hey, Jeff Good morning, and thanks for the questions here.
Maybe it was the start out on the contract logistics side I think Tim would you guys talked about that $5 million.
1 time loss of the startup just wanted to get a little bit more color on on what's going on there is that you know sort of an atypical event, where you didn't anticipate something in kind of got stuck with it or are there typically some of these cost involved in large new project wins that we should start to think about as you.
See some good demand for that product going forward.
Hey vs. Q. So yeah, we saw very similar things when we launched operations in 15, 16 and 17.
This particular, 1 as Tim mentioned.
In his previous comment that with the labor.
The amount of labor.
That would be needed in a singular market, obviously posed a number of challenges in being able to recruit and retain the right number of people to get into that operation and then you couple that with the chip shortage and the customers' production for that facility being down anywhere between 30 and 40%.
<unk> of where we were expected to be at this time, it's the combination of those 2 things. So I think this 1.
It was going okay up until about the.
May and then June it just like exploded so.
We're we're kind of in the same situation that we were with some of these other ones, where you kind of have a 2 quarter.
Because of where its the kind of takes the work itself through we're already working through the head count of the hours the excess equipment and the people. So thats why in my comments I mean, we're expecting about a similar loss of another $5 million at that particular operation in Q3. So.
August will be better than July and September should be close.
Close to breakeven, we're hoping by the end of the quarter, but.
More to come a lot of it's out of our hands, just because of the chip shortage and the customers' inability to get their production.
Yeah.
Really helpful and.
And Bruce I'll add to that I think that what <unk>.
We've experienced in the past and how we face and now the only real difference.
From the blueprint in the game plan.
Has been the labor market in it.
It's not a normal labor market when it comes to the hiring labor on the dock so we.
In some cases, we've even added some additional staffing on the Doc to cover for Carlos.
The other thing that you can measure in your launch template.
The quality and experience of an individual you're trying to hire all experienced individuals, but I'd be remiss there'll be lying to you to say that they are out there in big numbers. So not only have we had some turnover rehiring. We've also had to implement some additional training of mentorship programs to bring those individuals.
So they can have a level of the success in what I'll call of very intricate our supply.
Supply chain solution for our customers. So we're all we're all running as hard as we can right now and as Judy said, we have a plan to get to where we need to be we just have to execute every day.
Yes.
That's really helpful. And then just if we think about.
How the margins in contract logistics for legacy business stacks up against some of these new wins that youre seeing outside of the.
The exceptional labor market.
Are they fairly similar do they tend to be a little bit better because you have a better.
Better bargaining position relative to some of the big Oems or are they a little bit worse, because maybe you don't understand the business as well at the <unk>.
That.
Hi, Bruce the since you've now I mean, we would just say that we are bidding everything at the historical value at margins I mean, as we've learned in that business over the years Theres a lot.
In doing them or long term contracts the labor Thats employed is the transient and risky. So no. We're going after all of these new business wins at the historical margins that we expect for that the legacy contract logistics business.
Okay perfect. So no change.
So those long longer term margin targets, even if you start to accelerate the contract win rate.
No that is correct and as Tim mentioned in his comments in some cases, we're going back to the customer before we're launching and requesting labor rate increases because we tapped the market and say hey, if we can hire at those wages, while we have to go back.
Lot of increases before we start.
Okay. That's super helpful. And then just 1 last question here, maybe on the company brokerage side.
Seems like you've got a much higher percentage.
On the <unk>.
New rate business than some of your peers out there, but maybe you're a little bit lower on the low developing.
<unk>.
So just kind of thinking through your strategy in company brokerage.
You have any change in thoughts around what you want to get out of the business on the on the revenue side on the margin side versus some of the the targets that you've laid out in the past I mean, you're running at.
The 4% now versus that kind of 1% to 3% target.
And getting.
So is there of kind of.
Maybe an interest in running a smaller business, but a more profitable book business, if anything theyre going to think of it through.
Yes, I would think you hit it on the head there.
Its call, we'd like to be of $1 billion plus if it was intelligent so it's called intelligent growth with what the market will give it though.
Range. It said, we're rationalizing our rate, we're rationalizing our percentage of spot contractual and we're trying to position. It. So we can be successful on a continued basis.
As you noticed in the prepared remarks, we basically touched all of our customers in the first half of the year and in some.
So as we said that wasn't because the contract was up is because we had to go back and talk about a joint solution of how we're going to continue to supply capacity to meet their needs. So theres been some heavy lifting and a lot of homework done I wouldn't expect us to see us shrink I would just be the same we're going on we're going to grow.
On cable gently and we're trying to drive that margin into that 4% to 6% range that we've always chirped about wanting to be in to do that.
It's kind of hard because you see so much opportunity out there.
For the 4 wind right.
A ton of work flow into the system, but we've told our.
People you got to be disciplined in how you approach it and yet we will grow but we're going to grow with those margins that we've been preaching about for a long time. So it's still a ton of work to do but I think we have the machine kind of kind of heading that direction and I think that if the firm, but fair approach that not only do we win but our customer wins.
Because we are providing.
Good service.
Yes.
500 million or call it sub $250 million.
The size the range is pretty tough for brokerage.
So I'm wondering as you think about capital deployment, and especially M&A I mean is there any appetite there to.
Grow inorganically.
In brokerage.
This is Jude Bruce no I mean, we can grow that business as fast as we want to grow it Jeff by lowering our price right. So I think just echoing <unk> comments I mean the.
We're running of we've been running of different play for the past couple of years, where we have.
Our our company managed the brokerage and our company managed truckload operations working together on sales for customers of trying to have a combined pool of brokerage of great brokerage customers that translate into a great trucking customers as well. So we're going through the continued to grow that thing as Tim is that incremental.
<unk>, but really focused on both sides on the company truckload operation and the company brokerage operations on optimizing lanes in order to optimize profit.
Okay perfect. Thank you for the time thanks.
Thank you.
And there are no other audio questions excuse me you do have.
A question from the low.
Line of John Rolfe with Crescent Rock capital.
Hi, Good morning, guys just 1 quick question.
Why the decision now to re up on the repurchase authorization given that you still had I think sort of 300000 plus shares out and is.
<unk> read through.
These would be that decision in terms of the.
The M&A pipeline, and what you might or might not be seeing there currently.
For sure Yeah. This is jude so I mean.
Right before Covid, we had of repurchase in place and it only took us a month to.
The burnt through about $350 per share. So it was just the speed with which those share we were able to buy those shares back on the open market. So just to be safe. We just went to the board and ask them to reload. The authorization that we had before which was from a pretty long time goes from like 2014.2014, so were.
Their income 7 years out, but we've kind of got serious about the.
On the buybacks over the past couple of years. So it was really just because of it didn't take up the long time to buy back shares on the open market last time, and we wanted to make sure of that if the if the EBIT to EBITDA was right that we were in the market.
Playing that.
We're tying that form of our capital allocation strategy.
The M&A market I mean, it has picked up considerably I mean, we have.
We're probably getting stores.
4 deals a week from across the transportation spectrum from intermodal to truckload contract.
Tract logistics opportunities.
It's just that Universal historically has been super picky about what we want to buy and what customer vertical and market that we want to play in and so we just we let a lot of pitches past I mean, we don't swing at a lot of things, but when we do swing we.
The thing is pretty hard and if you remember since 2018.
Acquired about 6 businesses and the intermodal drayage space, we spent about a quarter of a $1 billion in doing that to really beef up the.
The regional on the regionalization of that business of the density of that business and.
We go out on board of some great customers to boot so.
We're expecting the same things.
With the current round of M&A and <unk>.
As things progressed, I mean, youll hear you'll hear more from us.
Great. Thank you guys I appreciate it thank you.
Of course, there are no other audio questions at this time.
Okay.
Well, thanks for everyones interest in Universal Logistics Holdings, and we look forward to talking to you next quarter. Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
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