Q4 2021 Universal Logistics Holdings Inc Earnings Call

February 11, 2022

Speaker 1: You

Okay.

Speaker 2: Hello, and welcome to Universal Logistics Holding for the quarter 2021 earnings conference call. At this time, our participants are in a listen-only mode. Brief questioning and answer session will follow the formal presentation. During the course of this call, management may make forward-looking statements based on their view of the business as seen today.

Hello, and welcome to Universal Logistics Holdings fourth quarter 2021 earnings Conference call.

At this time all participants are in a listen only mode.

Question and answer session will follow the formal presentation.

During the course of this call management May make forward looking statements based on their view of the business as seen today.

Speaker 2: Statements that are forward-looking relate to universal business objectives or expectations and can be identified by the use of the words such as belief, expect, anticipate, and project.

Statements that are forward looking relate to universal business objectives or expectations and can be identified by the use of the words such as belief.

<unk> anticipate and project.

Speaker 2: Such statements are subject to risk and uncertainty, 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.

Such statements are subject to risk and uncertainty and actual results could differ materially from those expectations as a reminder, this.

This conference is being recorded it is now my pleasure to introduce your host.

Speaker 2: Mr. Tim Phillips, Chief Executive Officer, Mr. Jude Behrs, Chief Financial Officer, and Mr. Stephen Fitzpatrick, Vice President of Finance and Vestal Relations. Thank you, Mr. Phillips. You may begin.

Mr. Tim Phillips, Chief Officer, Mr. Jude burst, Chief Financial Officer, and Mr. Steven Fitzpatrick, Vice President of Finance Investor Relations. Thank you. Mr. Phillips you may begin.

Speaker 3: Good morning and thank you for joining Universal Logistics Holdings fourth quarter earnings call.

Good morning, and thank you for joining Universal Logistics Holdings fourth quarter earnings call.

Speaker 3: Although the quarter saw headwinds on several fronts, I was extremely pleased with the resilience of all our Universal associates.

Although the quarter saw headwinds on several fronts I was extremely pleased with the resilience of all our universal associates.

Speaker 3: Universal's talented base of employees throughout all levels of the organization are key to executing our business strategy through continued supply chain disruption.

Universal's powered at the base of employees throughout all levels of the organization are key to executing our business strategy through continued supply chain disruption.

Speaker 3: While our quarterly and yearly results do not totally reflect our team, what our team is capable of, we continue to advance the corporation's footprint by adding new facilities, customers, and talent to the organization.

While our quarterly and yearly results do not totally reflect our team what our team is capable of we continued to advance the corporation's footprint by adding new facilities customers and talent to the organization.

Speaker 3: We left 2021 recording record revenue, operating income, and earnings per share, which leaves me extremely optimistic entering the new year.

2021 recording record revenue operating income and earnings per share, which leaves me extremely optimistic entering the new year.

Speaker 3: Now for the quarters. In yesterday's release, Universal reported fourth quarter earnings of $0.60 per share on total operating revenues of $467.4 million. As detailed in the release, fourth quarter earnings included $0.31 per share of litigation related charges and operational losses incurred in recent contract logistics launched in Detroit.

Now for the quarter and yesterday's release Universal reported fourth quarter earnings of <unk> 60 per share on total operating revenues of $467 4 million as detailed in the release fourth quarter earnings included <unk> 31 per share of litigation related charges and operational losses incurred in <unk>.

And contract logistics launch in Detroit.

Speaker 3: Fourth quarter operating revenues reflect Universal's highest quarterly revenue ever. However, as previously mentioned, we fell short of our earnings expectations.

Fourth quarter operating revenues reflect universal's highest quarterly revenue ever. However, as previously mentioned, we fell short of our earnings expectations.

Now for some color on our service line.

Speaker 3: In our contract logistics segment, we continue to experience headwinds highlighted by production downtime due to chip and part shortages at several of our key locations.

In our contract logistics segment, we continued to experience headwinds highlighted by production downtime due to chip in part shortages.

All of our key locations.

Speaker 3: We have been successful in obtaining contractual price increases with many of our business partners to help offset the continued inflation.

We have been successful in obtaining contractual price increases with many of our business partners to help offset the continued inflation.

Speaker 3: While the land remains high for autos and Class A trucks, part of the ship supply will remain on the radar moving through the first quarter of 2022.

While demand remained high for autos and class eight trucks, partly chip supply will remain on the radar moving through the first quarter of 2022.

Speaker 3: Our auto and truck customers continue to navigate supply chain problems, which has challenged their production schedule.

Our auto and truck customers continue to navigate supply chain product, which has challenged their production schedules.

Speaker 3: Production and operation fluency remain a challenge in servicing our new automotive customer in Detroit.

Production and operation fluency remain a challenge in servicing our new automotive customer Detroit.

Speaker 3: Once again, our contract logistics group saw another $5 million in losses associated with the operation for the corridor, and totaling nearly $20 million for the year.

Once again, our contract logistics group saw another $5 million of losses associated with the operation for the quarter and totaling nearly $20 million for the year.

Speaker 3: As with most in the transportation logistics space, we continue to invest in onboarding new talent in an extremely tight labor market.

As with most in the transportation and logistics space, we continue to invest in Onboarding, new talent in an extremely tight labor market.

Speaker 3: Although labor has been a challenge in this space, we successfully launched over 250 people in a large logistics center supporting heavy equipment provider in the Midwest.

Although labor has been a challenge in this space, we successfully launched over 250 people and a large logistics centers supporting heavy equipment provider in the Midwest.

Speaker 3: In late December , we were awarded a large piece of dedicated business from an existing automotive partner.

In late December we were awarded a large piece of dedicated business from an existing automotive partner. Our dedicated team is preparing to launch a 150 plus drivers in the latter part of the first quarter to support this operation we expect a rapid launch with full run rate revenue of over $30 million a year.

Speaker 3: Our dedicated team is prepping to launch 150 plus drivers in the latter part of the first quarter to support this up.

Speaker 3: We expect a rapid launch with full run rate revenue of over $30 million a year.

Speaker 3: In addition, our contract logistics group will begin launching a previously mentioned logistics center supporting a large aerospace customer at the beginning of the second quarter.

In addition, our contract logistics group will begin launching a previously mentioned logistics center supporting our largest aerospace customer at the beginning of the second quarter.

Speaker 3: Demand and opportunity remain strong for our contract logistics services. Our pipeline of opportunity remains robust, with several midsize opportunities reaching the latter stages of the procurement process.

Demand and opportunity remains strong for our contract logistics services, our pipeline of opportunity remains robust with several midsized opportunities, reaching the latter stages of the procurement process.

Speaker 3: Our intermodal dredge group experienced many of the same headwinds in the fourth quarter as throughout 2021. Congestant and equipment availability remain at the top of the list.

Our intermodal Drayage group experienced many of the same headwinds in the fourth quarter as throughout 2021.

Congestion and equipment availability remain at the top of the list.

Speaker 3: While our driver and contractor numbers remain flat.

While our driver and contractor numbers remained flat.

Speaker 3: Our intermodal segment faced recruiting competition as a result of a red hot truckload market and contractors getting their own authority.

Our intermodal segment faced recruiting competition as a result of a red hot truckload market and contractors getting their own authority.

Speaker 3: Accessorial charges remain elevated in the corridor as the merge, storage, per diem, and chassis charges totaled $35.7 million.

Accessorial charges remain elevated in the quarter as the emerge storage or DM and chassis charges totaled $35 7 million.

Speaker 3: Accessorial billings are expected to remain high because of the congestion experience in North America. We have worked closely with our customers to increase rates, to better position our margin profile.

Accessorial billings are expected to remain high because of the congestion experienced in North America we.

We have worked closely with our customers to increase rates to better position our margin profile.

Speaker 3: The Intermodal Group did realize a 33.8% year-over-year revenue increase and 17.1% improvement sequentially.

The intermodal group did realize a 33, 8% year over year revenue increase and 17, 1% improvement sequentially.

Speaker 3: Our year-over-year load count was down 14.2% because of increased length of haul, congestion, and a stagnant driver count.

Our year over year load count was down 14, 2% because of increased length of haul congestion and Australia.

<unk> driver count.

Speaker 3: We worked extremely close with our customers over the quarter to rationalize the congestion, labor shortage, and inflation.

We worked extremely close with our customers over the quarter to rationalize the congestion labor shortage and inflation.

Speaker 3: Through a combination of price increases, at-the-store billings, and increased length of haul, we realized a 31.9% increase in our revenue per load in the fourth quarter.

Through a combination of price increases accessorial billings and increased length of haul we realized a 31, 9% increase in our revenue per load in the fourth quarter.

Speaker 3: In our trucking segment, our agent base was able to capitalize on tight capacity with strong pricing.

In our trucking segment, our agent base was able to capitalize on tight capacity with strong pricing.

Speaker 3: Revenue was up over 25%, which was the result of moving more loads at a 19.3% increase in revenue per load.

Revenue was up over 25%, which was the result of moving more loads at a 19, 3% increase in revenue per load.

Speaker 3: We exited the year with a strong quarter in our wind business and expect the run into strong first half of 2022.

We exited the year with a strong quarter in our wind business and expect the run into strong first half of 2022.

Speaker 3: The truckload market remains very favorable for the near future with plenty of freight spurred by strong demand and prices.

The truckload market remains very favorable for the near future with plenty of freight spurred by strong demand and pricing.

Speaker 3: Our quest for continued growth will be majored by our ability to recruit contractors and recruit new agents into our network.

Our quest for continued growth will be measured by our ability to recruit contractors.

And recruit new agents into our network.

Speaker 3: 2021 represented one of our best years in agent growth with 21 new agents on board.

2021 represented one of our best years in agent growth with 21, new agents on board.

Speaker 3: I'm equally excited about the pipeline of new agents that the group continues to compile.

Im equally excited about the pipeline of new agents that the group continues to compile.

Speaker 3: Our company-managed brokerage operation continued to perform well in the quarter.

Our company manage brokerage operation continue to perform well in the quarter.

Speaker 3: Operating revenue per load increased 10.1% to $1,976 per load.

Operating revenue per load increased 10, 1% to $1976 per load.

Speaker 3: Although the number of loads hauled was down 19.4%, we were pleased with our pricing discipline and capacity utilization in a very tight broker market. Although this capped our top line revenue, our discipline allowed the group to obtain a 4% operating margin.

Although the number of loads hauled was down 19, 4%, we were pleased with our pricing discipline and capacity utilization.

Very tight broker market.

This kept our topline revenue our discipline allowed the group to obtain a 4% operating margin.

Speaker 3: As we move through the first quarter of 2022, we expect brokerage capacity to remain tight. I mean, record high rates by small carrier and single brokers assess the amount of moves they need to move in a week. We expect a strong SPARC market where it will extend opportunities to capitalize on margin. As mentioned before, we will continue to rationalize margin in front of high revenue growth.

As we move through the first quarter of 2022, we expect brokerage capacity remain tight.

Amid record high rate by small carrier and single brokers assets the amount assess the amount of moves they need to move in a week, we expect a strong spot market will extend opportunities to capitalize on margin as mentioned before we will continue to rationalize margin in front of high revenue.

Growth.

Speaker 3: Finally, our greatest resource will continue to be the people of Universal Logistics Holdings.

Finally, our greatest resource will continue to be the people of Universal logistics holding.

Speaker 3: We were able to onboard nearly 2,000 talented associates in 2021, which helped launch, service, and grow new and existing business opportunities.

We were able to onboard nearly 2000 talented associates in 2021, which helped launch service and grow new and existing business opportunity.

Speaker 3: Outside of some launch and labor headwinds, our 2021 fundamentals were strong.

Outside of some launch and labor headwinds, our 2021 fundamentals were strong.

Speaker 3: I truly believe we are entering 2022 with a strong cadence to return value to our shareholders and Irshas.

I truly believe we are entering 2022 with a strong cadence to return value to our shareholders and our associates.

Speaker 3: I would now like to turn this call over to Juce. Juce? Thanks, Tim. Good morning, everyone. Universal Logistics Holdings reported consolidated net income of $16.2 million, or $0.60 per share, on total operating revenues of $467.4 million in the fourth quarter of 2021. This compares to net income of $16.2 million, or $0.60 per share, on total operating revenues of $386 million in the fourth quarter of 2020.

I would now like to turn the call over to Jude juice. Thanks, Tim Good morning, everyone to Universal Logistics Holdings reported consolidated net income of $16 2 million or <unk> 60 per share on total operating revenues of $467 4 million in the fourth quarter of 2021. This compares to net income of $16.

$2 million or <unk> 60 per share on total operating revenues of $386 million in the fourth quarter of 2020.

Speaker 4: Included in the fourth quarter of 2021's operating results were pre-tax charges of $6 million for auto liability claims expected to settle over policy limits, as well as $5 million in operating losses incurred in a recently launched contract logistics program in Detroit.

Included in the fourth quarter of 2021 operating results were pre tax charges of $6 million for auto liability claims expected to settle over policy limits as well as $5 million in operating losses incurred a recently launched contract logistics program in Detroit for.

Speaker 4: For the quarter, these items adversely impacted our operating ratio by 230 basis points and were a drag on our earnings of approximately 31 cents per share.

For the quarter. These items adversely impacted our operating ratio by 230 basis points and were a drag on our earnings of approximately 31 per share.

Speaker 4: Consolidated income from operations was $23.8 million for the quarter, compared to $23.5 million one year earlier. EBITDA decreased $4.5 million to $39.7 million, which compares to $44.2 million during the same period last year. Our operating margin and EBITDA margin for the fourth quarter of 2021 are 5.1% and 8.5% of total operating revenue.

Consolidated income from operations was $23 8 million for the quarter compared to $23 5 million one year earlier EBITDA decreased $4 5 million to $39 7 million, which compares to $44 2 million during the same period last year.

Our operating margin and EBITDA margin for the fourth quarter of 2021, or five 1% and eight 5% of total operating revenues these metrics compared to six 1% and 11, 4% respectively in the fourth quarter of 2020.

Speaker 4: These metrics compared to 6.1% and 11.4% respectively in the fourth quarter of 2020.

Speaker 4: Looking at our segment performance for the fourth quarter of 2021, in our contract logistics segment, which includes our value-added and dedicated transportation businesses, income from operations decreased $5.9 million to $6.1 million on $160.7 million of total operating revenues. This compares to operating income of $12 million on $133.2 million of total operating revenue in the fourth quarter of 2020.

Looking at our segment performance for the fourth quarter of 2021, and our contract logistics segment, which includes our value added and dedicated transportation businesses income from operations decreased $5 9 million to $6 1 million on $167 million of total operating revenues. This compares to operating income of $12 million on <unk>.

Third $33 2 million of total operating revenue in the fourth quarter of 2020 opt.

Operating margins for the quarter were three 8% versus 9% last year.

As mentioned in Tim's comments and in our release, our contract logistics business incurred a $5 million loss in the third quarter at one of our launches supporting an automotive OEM here in Detroit.

Speaker 4: For the full year, launch losses and downtime settlements with customers impacted contract logistics operating income by $23.7 million.

For the full year launch losses, and downtime settlements with customers impacted contract logistics operating income by $23 7 million.

Speaker 4: This affected or impacted segment operating margins by 380 basis points for 2021.

This affected or impacted segment operating margins by 380 basis points for 2021.

Speaker 4: In our Aeromodal segment, operating revenues increased $35.8 million to $141.7 million compared to $105.9 million in the same period last year. And income from operations increased $6 million to $13.8 million. This compares to operating income of $7.8 million in the fourth quarter of 2020.

In our intermodal segment operating revenues increased $35 8 million to $141 7 million compared to $105 9 million in the same period last year and income from operations increased 6 million to $13 8 million. This compares to operating income of $7 8 million in the fourth quarter 2020.

Speaker 4: In our trucking segment, which includes both our agent-based and company-managed truckload operations, operating revenues for the quarter increased 25.5% to $101.5 million, compared to $80.9 million in the same quarter last year, while income from operations decreased $2.4 million to $1.1 million. This compares to operating income of $3.5 million in the fourth quarter of 2020. The trucking segment recorded a $6 million charge for auto liability claims expected to settle over policy limits.

In our trucking segment, which includes both our agent base and company managed truckload operations operating revenues for the quarter increased 25, 5% to $101 5 million compared to $80 9 million in the same quarter last year, while income from operations decreased $2 4 million to $1 1 million. This compares to operating.

Income of $3 5 million in the fourth quarter of 2020.

The trucking segment recorded a $6 million charge for auto liability claims expected to settle over policy limits.

Speaker 4: These charges adversely impacted the trucking segment's operating margin by 590 basis points for the quarter.

These charges adversely impacted the trucking segments operating margin by 590 basis points for the quarter.

Speaker 4: In our company-managed brokerage segment, operating revenues for the quarter declined $3.8 million to $62 million, compared to $65.8 million in the same quarter last year, while income from operations increased $2.3 million to $2.5 million.

Our company managed brokerage segment operating revenues for the quarter declined $3 8 million to $62 million compared to $65 8 million in the same quarter last year, while net income from while income from operations increased $2 3 million to $2 5 million.

Speaker 4: This compares to operating income of $200,000 in the fourth quarter of 2020. Operating margins for the quarter were 4% versus 3 tenths of 1% last year.

This compares to operating income of 200000 in the fourth quarter of 2020.

Operating margins for the quarter were 4% versus three tenths of 1% last year.

Speaker 4: On our balance sheet, we held cash and cash equivalents totaling $13.9 million and $8 million of marketable securities. Outstanding debt, outstanding interest-bearing debt, net of $1.1 million of debt issuance costs totaled $427.3 million at the end of the period. Excluding lease liabilities related to ASC 842, our net interest-bearing debt to reported EBITDA was 2.4 times.

On our balance sheet, we held cash and cash equivalents totaling $13 9 million and $8 million of marketable securities.

Outstanding debt outstanding interest bearing debt net of $1 $1 million of debt issuance cost totaled $427 3 million at the end of the period, excluding lease liabilities related to ASC 842, our net interest bearing debt to reported EBITDA was two four times.

Speaker 4: Due to the availability of transportation equipment in 2021, our capital expenditures have been somewhat lower than our customary range. Capital expenditures for the quarter total $12.6 million and $38.8 million for the full year. As a result, we expect our capital expenditures in 2022 to be higher than the current year. For 2022, we are expecting capital expenditures to be in the $80 to $90 million range, and interest expense to come in between $15 and $18 million.

Due to the availability of transportation equipment in 2021, our capital expenditures have been somewhat lower than our customary range capital expenditures for the quarter totaled $12 6 million and $38 8 million for the full year. As a result, we expect our capital expenditures in 2022 to be higher than the current year.

For 2022, we are expecting capital expenditures to be in the $80 to $90 million range and interest expense to come in between 15 and $18 million.

Speaker 4: Based on the current operating environment for the first quarter of 2022, we are expecting top-line revenues between $430 and $450 million and operating margins in the 7.5 to 8.5% range.

Based on the current operating environment for the first quarter of 2022, we're expecting topline revenues between $430 and $450 million and.

Margins in the seven five to eight 5% range.

Speaker 4: For the full year of 2022, we are expecting total operating revenues between $1.8 and $1.9 billion and operating margins in the 8% to 9% range.

For the full year of 2022, we're expecting total operating revenues between one eight and $1 9 billion and operating margins in the 8% to 9% range and.

Speaker 4: And finally, our Board of Directors declared Universal's 10.5 cents per share quarterly dividend. This quarter's dividend is payable to shareholders of record at the close of business on March 7, 2022, and is expected to be paid on April 4, 2022. With that, Justin, we're

And finally, our board of directors declared Universal's 10, five cents per share quarter quarterly revenue quarterly dividends. This quarter's dividend is payable to shareholders of record at the close of business on March seven 2022 and is expected to be paid on April four 2022.

With that Jonathan we are ready to take some questions.

Speaker 2: And thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. And our first question comes from Chris Weatherby from Citigroup. Your line is now open.

And thank you as a reminder to ask a question you will need to press star one on your telephone to Joel Your question press. The pound key please standby will be compile the Q&A roster.

And our first question comes from Chris Wetherbee from Citigroup.

Your line is now open.

Okay.

Speaker 2: Chris, your line is now open. If your phone's on mute, could you please unmute it?

Chris Your line is now open if your phones on mute could you. Please on mute it.

Okay.

Speaker 2: And our next question is going to come from Bruce Chan from CFO . Your line is now open.

And our next question is going to come from Bruce Chan from Stifel. Your line is now open.

Speaker 5: Hey, good morning, everybody. And thanks for taking the questions here. Maybe just want to start, you know, with what's going on around, you know, the border, obviously some shutdowns on the Ambassador Bridge. And, you know, we've heard about some OEMs closing plants as a result. So just want to see, you know, whether that's having a material impact on your operations and what you sort of expect there as far as the first quarter is concerned.

Hey, good morning, everybody and thanks for taking the questions here.

Maybe just want to start with what's going on around that.

The border.

Obviously, some shutdowns on the ambassador bridge and we've heard about.

Oems closing plants as a result, so just wanted to see whether thats, having a material impact on your operations and what you sort of expect there as far as the first quarter is concerned.

Speaker 3: Yeah, Bruce, this is Tim. Thanks for the question. Yeah, we have we have seen a little bit of disturbance as a result of the border blockade.

Yes, Bruce this is Tim Thanks for the question, Yes, we have we have seen a little bit of disturbance as a result of the border blockade.

Speaker 3: There's been no complete shift shutdown, but there's been some short shifting at a couple of the facilities we that we

Theres been note a complete shift shutdown, but theres been some short shifting at a couple of facilities that we service.

Speaker 3: We hope that there's some result to that in the near future, meaning today.

We hope that there is some result of that in the near future, meaning today.

Speaker 3: The autos have been communicated that they're going to continue to push production. They've had to come up with some various means of getting, you know, parts across the border. But I see this, I see this as being

Autos have been communicated that they're going to continue to push production. It had to come up with some various means of getting parts across the border.

I see this I see this as being this week blip on the radar.

Speaker 3: blip on the radar and we'll continue to push forward with what I think to be a very good

And we will continue to push forward with I think to be a very good first quarter.

Speaker 5: Okay, great. I appreciate that color and just maybe sticking with contract logistics here with something to get a little more color on the, you know, 5Million dollar charge. Is that a new facility? Is that the same kind of facility or contract that was kind of causing the headache for the majority of 2021?

Okay, Great I appreciate that color and just maybe sticking with contract logistics here.

Hoping to get a little more color on the $5 million charge.

Is that a.

A new facility is that the same kind of facility or contract that was kind of causing the headache for the majority of 2021.

Speaker 3: Yeah, that that is the same facility that was charging some of the headache for 2021 from an operating standpoint. We have seen some progress.

Yes that is the same facility that was charging some of the headache for 2021 from.

From an operating standpoint, we have seen some progress on the facility itself. There were some other associated charges in that $5 million in the fourth quarter and we've been working with the customer to rationalize process operation wage inflation.

Speaker 3: on the facility itself. There were some other associated charges in that five million dollars in the fourth quarter.

Speaker 3: And we've been working with the customer to rationalize process, operation, wage inflation.

Speaker 3: The talks are continued and ongoing as recent as just a couple days ago, so it's our hope.

The talks are continued and ongoing.

Recently, just a couple of days ago. So it's our hope.

Speaker 3: as we push through this to get some pricing in place that allows us to take it to the next step so we are returning value and not spinning our wheels.

As we pushed through this to get them to get some pricing in place that allows us to take it to the next step. So we are returning value and not spinning our wheels.

Speaker 5: Okay, got it. And I imagine visibility is tough on the whole chip shortage issue, but is there any color that you've gotten from your customers as far as what their expectations are on kind of return to normalcy? And then once that happens, can you maybe just give us a reminder of what comes back in terms of variable cost, or are we just going to see essentially pure leverage on top here when volumes come back?

Okay got it and I imagine visibility is tough on the whole chip shortage issue, but is there any color that you've gotten from your customers as far as what their expectations are on kind of return to normalcy and then once that happens can you maybe just give US a reminder of what comes back in terms of variable costs.

Or are we just going to see essentially pure leverage on top here when volumes come back.

Speaker 3: Yeah, I would say there's some leverage on top of quarter one when we see some of this come back. The problem is...

Yeah, I would say there is some leverage on top of quarter. One when we see some of that to come back. The problem is we do get visit bits and pieces of what's going on with the chip shortage I don't know if sometimes if they have the full stream of whats holding up some of their their chips for production and what I've learned is chips go into a lot of different pieces and parts.

Speaker 3: We do get bits and pieces of what's going on with the chip shortage. I don't know sometimes if they have the full stream of what's holding up some of their chips for production. And what I've learned is chips go into a lot of different pieces and parts.

Speaker 3: So some of the associated pieces and parts that we see inbound for the plant could have a chip that's holding it up or it could just be a raw material event with the part. But there's definitely been some disturbance on that level.

So some of the associated pieces and parts that we see inbound for the plant.

Have a chip that's holding it up or it could just be a raw material.

Event with apart, but theres best there has definitely been.

There's definitely been some disturbance on that level and the area, where we find ourself, if we want to call. It that lucky the plants that we service.

Speaker 3: The area where we find ourselves, if we want to call it that lucky, the plants that we service are of the product that is of high demand, so they are funneling parts and chips.

The product that is of high demand. So they are funneling parts and chips.

Speaker 3: into those plants, so we see a pretty regular overall production schedule. Now, we still have had the disturbance, as we just spoke about in Detroit, they still have struggled to get up to the production level that they want to be, and some of that is probably their own internal doing, but the other piece of it is just the flow of parts as it comes in on a regular basis. So I expect...

Into those plants, so we see a pretty regular overall production schedule now we still have had the disturbance as we just spoke about Detroit. They still have struggled to get up to the production level that they want to be and some of that probably their own internal doing but the other piece of it is just the flow of parts as it comes in.

On a regular basis. So I expect if you would ask me that.

Speaker 3: If you would ask me, like I said in my comments, the first quarter, we'll still see some hit and miss on parts. I would hope that as the year progresses, we see a better fluency. If we look at what our production predictions are, they're solid, but to be solid, you've got to have the chip.

Said in my comments, the first quarter, we will still see some.

Hit and Miss on part I would hope that as the year progresses.

See a better fluids and fluency if we look at what our production predictions are.

They are solid but to be solid you got to have the chip and you got to have the people to write so we all face that that people got to be there to put the piece of the vehicle together and we have to have the park slope. So theres still there'll be some short term services.

Speaker 3: And you've got to have the people, too, right? So we all face that. The people have got to be there to put the vehicle together, and we have to have the park flow. So there will still be some short-term disturbances.

Speaker 5: Got it. And then, you know, maybe just two more quick ones here. Good to see the new customers coming in on the contract logistics side, you know, diversifying the portfolio a little bit. As you think about launching those facilities, can you, you know, maybe give us some flavor on what the maybe margin headwind is as you ramp and when you expect that to kind of fade and normalize?

Got it and then maybe just two more quick ones here.

Good to see the new customers coming in on the contract logistics side diversifying the portfolio a little bit.

As you think about launching those facilities can you maybe just give us some flavor on what the margin headwind is as you ramp and when you expect that to kind of fade and normalize.

Speaker 3: Yeah, on the first one that I mentioned, which is in our dedicated contract logistics group, I think we've rationalized the agreement along with the market when it comes to wage inflation. I think we'll enter that in a good space, in a good spot. I think that on this particular transition of services, we will hit the ground running hard in the latter part of Q1. I would think by the time we get through the middle of Q2.

Yes.

The first one that I mentioned.

Which is in our dedicated contract logistics group.

Think we've rationalized the agreement along with the market when it comes to wage inflation I think will enter that in a good space in a good spot I think that on this particular transition of services, we will hit the ground running hard in.

In the latter part of Q Q1, I would think by the time, we get through the middle of Q2, we're up and running as we live there for the last 10 years. So that's my hope that's what the troops have been directed and Thats been our communication and collaboration with our customer.

Speaker 3: We're up and running as we have lived there for the last 10 years. That's my hope. That's what the troops have been directed. And that's been our communication and collaboration with our customer.

Speaker 6: The launch for the aerospace customer on the contract logistics value-added space, we expect a little bit of a soccer.

The launch for the aerospace customer.

Contract logistics value added space.

We expect a little bit of a softer launch we are comfortable right now with with what we priced into it from a labor standpoint, we are working working towards that launched at the beginning of second quarter I would expect that that will take a little bit longer to get up to full run rate. So our expectation is there could be a.

Speaker 3: We are comfortable right now with what we've priced into it. From a labor standpoint, we are working towards that launch the beginning of second quarter. I would expect that that will take a little bit longer to get up to full run rate. So our expectation is there could be a little bit of a disturbance.

Speaker 3: beginning of the second quarter with launching that, but I don't expect to be any kind of hiccup like we hit with the latter one we just mentioned.

Little bit of a disturbance beginning of the second quarter with launching that but I don't expect to be any kind of pick up like we hit with the latter one we just mentioned in Detroit.

Speaker 5: Got it. That makes sense. And then just for the last one here on the brokerage and maybe also the trucking segments, you know, good to see you making some progress there. Can you just speak broadly about what you're seeing in terms of, you know, customer activity, shipper activity? Are we getting back to kind of a normal bid cycle and starting to see people, you know, lock in contracts for normal duration?

Got it that makes sense and then just for the last one here on the brokerage and maybe also the trucking segments. Good to see you're making some progress. There can you just speak broadly about what youre seeing in terms of customer activity shipper activity or are we getting back to kind of a normal bid cycle.

And starting to see people lock in contracts for normal durations.

Speaker 3: Well, in our largest customer sector, yes, we just went through a couple rounds of the contract negotiations and pricing.

Well in our largest customer sector, yes.

Went through.

Couple of rounds of the contract negotiations and pricing they are locking rates in for the year or are there larger customers and yes. There is a lot of wage inflation a lot of <unk>.

Speaker 3: They are locking rates in for the year on our larger customers, and yes, there is.

Speaker 3: a lot of pricing inflation on that, and we've been working through that. I would say that there's still customers out there that are doing short-term type bids or were pricing things out poorly, so there's still some of that.

<unk> inflation on that and we've been working through that I wouldn't say that there's still customers out there that are doing short term type bids or we're pricing things out quarterly so theres still some of that in the marketplace and I think that we'll see that into the near future.

Speaker 3: in the marketplace, and I think that we'll see that into the near future.

Speaker 5: Okay, great. Well, I appreciate that, caller, as always, and congratulations on making the best of a tough year. Thanks, Ernie.

Okay, great well I appreciate the color as always and congratulations on making the best of a tough year. Thank.

Thanks, Brad.

Speaker 2: And thank you. And if you have a question, it's star one. Again, if you'd like to ask a question, that is star one. And our next question comes from Chris Rutherby from Citigroup. Chris, your line is now open.

And thank you and and if you have a question.

Star one again, if you'd like to ask a question that is star one.

Next question comes from Chris Wetherbee from Citigroup, Chris Your line is now open.

Speaker 7: Hey, thanks. Good morning, guys. This is Eli Winske on for Chris. Ben or Laura, we'll talk about the technical difficulties earlier. Maybe we can start with the intermodal. So, just curious what you guys are expecting in terms of the CapEx side of that, taking delivery. I know it's hard to look at it with the congestion right now. And then maybe we can talk about the box on the side of that. And then just to tap onto that same question, what do you guys think that a normalized revenue per load in intermodal could look like?

Hey, Thanks. Good morning, guys. This is <unk> on for Chris.

Thanks for all the technical difficulties earlier, maybe we can start with intermodal. So just curious what you guys are expecting in terms of the capex side of that taking delivery I know, it's hard to look at it with.

The congestion right now.

And then maybe if you could talk about Boston side of that and then just to tack onto that same question. What do you guys think a normalized revenue promoting interval look like throughout the year.

Speaker 3: Well, some of your first part of your question broke up. I did hear the last part you were looking at. You said something toward the extent of normalized load revenue.

Well some of your first part of your question broke up I did hear the last part you were looking at you said something toward the extent of normalized load revenue.

Speaker 4: Yeah, so we could start there, I guess, just that one and then what you guys think that the box turns could be and what container catbacks might look like throughout 2022. Thanks.

Yes, so we could start there I guess just that one and then what you guys think that the box turns could be and what container capex might look like throughout 2022.

Speaker 3: Right. Well, let's start with that. I think the revenue per load will, as it stands right now, will hold strong. We haven't seen any deterioration in that.

Right well, let's start with that I think the revenue per load will as it stands right now will hold strong we haven't seen any deterioration in that in fact, our pricing initiatives that are just the opposite we're still pushing for.

Speaker 3: In fact, our pricing initiatives are just the opposite. We're still pushing for premium pricing because of the congestion levels that we're experiencing around the country. The fluencies really hurt the productivity of the driver and contractor, and not to mention the options that we have out there in the various transportation spaces.

Premium pricing because of the congestion levels that we're experiencing around the country. The fluency is really hurt the productivity of the driver and contractor and not to mention the options that we have out there in the various transportation spaces. So I think I think that what we will see.

Speaker 3: So, I think that what we'll see is similar to what we're seeing now, or maybe even a tad better. When it does come down to earth, as you put it, I'm sure we'll see some reduction, but I think some of this pricing outside of some of the spot accessorials is here to stay for at least the near term of this year.

It's similar to what we're seeing now or maybe even a tad better.

It does when it does come down to Earth as you put it.

I am sure we will see some reduction, but I think some of it some of this pricing outside of.

Some of the spot at the soils is here to stay for at least the near term this year.

Speaker 4: And on the catback side, so for 2022, we don't buy the 53-foot boxes, all we buy are chassis.

And on the Capex side, so for 2022, we don't buy.

Boxes, all we buy our chassis.

Speaker 4: Because we're primarily in the international box market and not in the domestic box market. So we're currently planning on buying somewhere between 250 to 500 chassis, depending on availability. So somewhere between 8 to 15 million bucks. The high end, if we can get them, but based on what we're hearing right now, most likely on the lower end of that, about half that, about 250, which would be about 8 million bucks.

Because we're primarily in the international box market and not at the domestic box market. So we're currently planning on buying.

Somewhere between $250 to 500 chassis, depending on availability, so somewhere between $8 million to $15 million box. The high end, if we can get them, but based on what we're hearing right now most likely on the lower end of that about half of that about 250, which would be about 8 million Bucks.

Speaker 7: Yeah, that makes sense. Thank you. Maybe we can turn to the dedicated side. You guys said you're going to bring on 150 new drivers. Can you talk about what that process looked like so far and just what the hiring environment looks like for you guys right now?

That makes sense. Thank you maybe we can turn to the dedicated side you guys said youre going to bring on 150, new drivers can you talk about what that process looks like so far and just what the hiring environment looks for it looks like for you guys right now.

Speaker 3: Yeah, definitely. You know, you would think as we went into this, we were pretty up front with ourselves about what we were going to be able to do from a hiring process. Remember, that's 150 plus drivers in a short period of time is a task.

Yes definitely.

I think as we went into this we were pretty upfront with ourselves about what we were going to be able to do from a hiring process remember that 150, plus drivers in a short period of time.

Speaker 3: I'm very optimistic about where we are in the process right now, because we price this thing accordingly to be successful, maybe even to set some of the wage rate in the market to capitalize on that driver recruiting, and up until this point, I'll tell you that I've been very optimistic about our cadence of bringing on new talent, so I don't think anything out there at this point that disturbs the cadence of the launch. The launch will start in March. We have enough drivers to get through the first phase or two of the launch.

As a task.

Very optimistic about where we are in the process right now because we price. This thing accordingly to be successful maybe even to set some of the wage rate in the market to capitalize on on that driver recruiting and up into this point I will tell you that I've been very.

Very optimistic about our cadence of bringing on new talent. So I don't think anything out there at this point that disturbs the cadence of the launch the launch will start in March we have enough drivers to get through the first phase are two of the launch and.

Speaker 3: And I'm extremely optimistic by the time we get to the end of the launch, which is over a three or four week period, we will have every driver and every seat.

I'm extremely optimistic by the time, we get to the end of the lines, which is over three or four week period. We will have every driver in every seat equipments out there. We're ready to go that's why I think this will be a very quick implementation into it and this is something we have a lot of experience with <unk>.

Speaker 3: Equipment's up there. We're ready to go. That's why I think this will be a very quick

Speaker 6: implementation into it, and this is something we have a lot of experience with. We provide the same type of services at a couple other major facilities, so expertise is there. The launch team is there. I just feel good about it. I feel good about it in a rough labor market, too. So... That makes sense. Thanks for the time, guys.

We provide the same type of services had a couple of other major facility. So expertise is there the launch teams there I just feel good about it I feel good about it and are up labor market too so.

That makes sense. Thanks for the time guys I appreciate it thank you.

Yes.

Speaker 2: Ed, thank you, and I'm showing no further questions. I would now like to turn the call back to Tim Phillips for closing remarks.

And thank you and I'm showing no further questions I would now like to turn the call back to Tim Phillips for closing remarks.

Speaker 3: Well, thanks for calling in, and I can assure you Universal is going to be focusing on our people, continuing pricing, uniformity of process, technology, and last but not least, safety as we go through 2022. I appreciate you calling in and look forward to talking to you very soon. Thank you.

Well, thanks for calling in and I can assure you universal is going to be focusing on our people continuing pricing uniformity of process technology and last but not least safety as we go through 2022 I. Appreciate you calling in and look forward to talking to you very soon thank you.

Speaker 2: This concludes today's conference call. Thank you for participating, and you may now disconnect. Speakers, please stand by.

This concludes today's conference call. Thank you for participating and you may now disconnect speakers. Please standby.

Okay.

Yes.

[music].

Yes.

Okay.

Yes.

[music].

Okay.

[music].

Okay.

[music].

Speaker 1: You

Speaker 1: I.

[music].

Speaker 1: you

Speaker 2: Hello, and welcome to Universal Logistics Holding Fourth Quarter 2021 Earnings Conference Call. At this time, our participants are in a listen-only mode. Brief question-and-answer session will follow the formal presentation. During the course of this call, management may make forward-looking statements based on their view of the business as seen today.

Hello, and welcome to Universal Logistics Holdings fourth quarter 2021 earnings Conference call. At this time, all participants are in a listen only mode.

Question and answer session will follow the formal presentation.

During the course of this call management May make forward looking statements based on their view of the business as seen today.

Statements that are forward looking relate to universal business objectives or expectations and can be identified by the use of the words such as belief.

Bank anticipate and project.

Such statements are subject to risk and uncertainty 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.

Speaker 2: Mr. Tim Phillips, Chief Executive Officer, Mr. Jude Behrs, Chief Financial Officer, and Mr. Stephen Fitzpatrick, Vice President of Finance and Investor Relations. Thank you, Mr. Phillips. You may begin.

Mr. Tim Phillips, Chief Banking officer, Mr. Jude burst, Chief Financial Officer, and Mr. Steven Fitzpatrick, Vice President of Finance Investor Relations. Thank you. Mr. <unk> you may begin.

Speaker 3: Good morning and thank you for joining Universal Logistics Holdings fourth quarter earnings call.

Good morning, and thank you for joining Universal Logistics Holdings fourth quarter earnings call.

Speaker 3: Although the quarter saw headwinds on several fronts, I was extremely pleased with the resilience of all our Universal associates.

Although the quarter saw headwinds on several fronts I was extremely pleased with the resilience of all our Universal associates Universal's talented base of employees throughout all levels of the organization are key to executing our business strategy through continued supply chain disruption.

Speaker 3: Universal's talented base of employees throughout all levels of the organization are key to executing our business strategy through continued supply chain disruption.

While our quarterly and yearly results do not totally reflect our team what our team is capable we continued to advance the corporation's footprint by adding new facilities customers and talent to the organization. We left 2021 recording record revenue operating income and earnings per share.

Speaker 3: We left 2021 recording record revenue, operating income, and earnings per share, which leaves me extremely optimistic entering the new year.

Which leaves me extremely optimistic entering the new year.

Speaker 3: Now for the quarter. In yesterday's release, Universal reported fourth quarter earnings of $0.60 per share on total operating revenues of $467.4 million. As detailed in the release, fourth quarter earnings included $0.31 per share of litigation-related charges and operational losses incurred in recent contract logistics launched in Detroit.

Now for the quarter.

In yesterday's release Universal reported fourth quarter earnings of <unk> 60 per share on total operating revenues of $467 4 million as detailed in the release fourth quarter earnings included <unk> 31 per share of litigation related charges and operational losses incurred in recent contract logistics launch in Detroit.

Speaker 3: Fourth quarter operating revenues reflect Universal's highest quarterly revenue ever. However, as previously mentioned, we fell short of our earnings expectations. Now for some.

Yeah.

Fourth quarter operating revenues reflect universal's highest quarterly revenue ever. However, as previously mentioned, we felt short of our earnings expectations.

Now for some color on our service lines.

Speaker 3: In our contract logistics segment, we continue to experience headwinds highlighted by production downtime due to chip and part shortages at several of our key locations.

In our contract logistics segment, we continued to experience headwinds highlighted by production downtime due to chip in parts shortages at several of our key locations.

Speaker 3: We have been successful in obtaining contractual price increases with many of our business partners to help offset the continued inflation.

We have been successful in obtaining contractual price increases with many of our business partners to help offset the continued inflation.

Speaker 3: While the land remains high for autos and Class A trucks, part of the ship supply will remain on the radar moving through the first quarter of 2022.

While demand remains high for autos and class eight trucks heartburn chip supply and will remain on the radar moving through the first quarter of 2022.

Speaker 3: Our auto and truck customers continue to navigate supply chain problems, which has challenged their production schedule.

Our auto and truck customers continue to navigate supply chain product, which has challenged their production schedules.

Speaker 3: Production and operation fluency remain a challenge in servicing our new automotive customer in Detroit.

Production and operational fluency remain a challenging servicing our new automotive customer in Detroit.

Speaker 3: Once again, our contract logistics group saw another $5 million in losses associated with the operation for the corridor, and totaling nearly $20 million for the year.

Once again, our contract logistics groups saw another $5 million of losses associated with the operation for the quarter and totaling nearly $20 million for the year.

Speaker 3: As with most in the transportation logistics space, we continue to invest in onboarding new talent in an extremely tight labor market.

As with most in the transportation and logistics space, we continue to invest in Onboarding new talent.

In an extremely tight labor market.

Speaker 3: Although labor has been a challenge in this space, we successfully launched over 250 people in a large logistics center supporting heavy equipment provider in the Midwest.

Although labor has been a challenge in this space, we successfully launched over 250 people in a large logistics centers supporting heavy equipment provider in the Midwest.

Speaker 3: In late December , we were awarded a large piece of dedicated business from an existing automotive partner.

In late December we were awarded a large piece of dedicated business from an existing automotive partner.

Speaker 3: Our dedicated team is prepping to launch 150-plus drivers in the latter part of the first quarter to support this up.

Our dedicated team is prepping the launch of 150 plus drivers in the latter part of the first quarter to support this operation we expect a rapid launch with full run rate revenue of over $30 million a year.

Speaker 3: We expect a rapid launch with full run rate revenue of over $30 million a year.

Speaker 3: In addition, our contract logistics group will begin launching a previously mentioned logistics center supporting a large aerospace customer at the beginning of the second quarter.

In addition, our contract logistics group will begin launching a previously mentioned logistics center supporting a large aerospace customer at the beginning of the second quarter.

Speaker 3: Demand and opportunity remain strong for our contract logistics services. Our pipeline of opportunity remains robust with several midsize opportunities reaching the latter stages of the procurement process.

Speaker 3: Our intermodal dredge group experienced many of the same headwinds in the fourth quarter as throughout 2021. Congestion and equipment availability remain at the top of the list.

Our intermodal Drayage group experienced many of the same headwinds in the fourth quarter as throughout 2021.

Congestion and equipment availability remain at the top of the list.

Speaker 3: While our driver and contractor numbers remain flat.

While our driver and contractor numbers remained flat our intermodal segment space recruiting competition as a result of a red hot truckload market and contractors getting their own authority.

Speaker 3: Our intermodal segments face recruiting competition as a result of a red hot truckload market and contractors getting their own authority.

Speaker 3: Accessorial charges remain elevated in the quarter as the merge, storage, per diem and chassis charges totaled $35.7 million.

Accessorial charges remain elevated in the quarter as the emerge storage or DM and chassis charges totaled $35 7 million.

<unk> billings are expected to remain high because of the congestion experienced in North America. We have worked closely with our customers to increase rates to better position our margin profile.

Speaker 3: The Intermodal Group did realize a 33.8% year-over-year revenue increase and 17.1% improvement sequentially.

The intermodal group did realize a 33, 8% year over year revenue increase and 17, 1% improvement sequentially.

Speaker 3: Our year-over-year load count was down 14.2% because of increased length of haul, congestion, and a stagnant driver count.

Our year over year load count was down 14, 2% because of increased length of haul congestion in Australia.

Speaker 3: We worked extremely close with our customers over the quarter to rationalize the congestion, labor shortage, and inflation.

Nick driver count.

We worked extremely close with our customers over the quarter to rationalize the congestion labor shortage and inflation.

Speaker 3: Through a combination of price increases, at-the-store billings, and increased length of haul, we realized a 31.9% increase in our revenue per load in the fourth quarter.

Through a combination of price increases accessorial billings and increased length of haul we realized a 31, 9% increase in our revenue per load in the fourth quarter.

Speaker 3: In our trucking segment, our agent base was able to catalyze on tight capacity with strong prices.

In our trucking segment, our agent base was able to capitalize on tight capacity with strong pricing.

Speaker 3: Revenue was up over 25%, which was the result of moving more loads at a 19.3% increase in revenue per load.

Revenue was up over 25%, which was the result of moving more loads at a 19, 3% increase in revenue per load.

Speaker 3: We exited the year with a strong quarter in our wind business and expect the run into strong first half of 2022.

We exited the year with a strong quarter in our wind business and expect the run into strong first half of 2022.

Speaker 3: The truckload market remains very favorable for the near future, with plenty of freight spurred by strong demand and price.

The truckload market remains very favorable for the near future with plenty of freight spurred by strong demand and pricing.

Speaker 6: Our quest for continued growth will be majored by our ability to recruit contractors and recruit new agents into our network.

Our quest for continued growth will be measured by our ability to recruit contractors.

And recruit new agents into our network two.

Speaker 3: 2021 represented one of our best years in agent growth with 21 new agents on board.

<unk> 2021 represented one of our best years in agent growth with 21, new agents on boarded.

Speaker 6: I'm equally excited about the pipeline of new agents that the group continues to compile.

Equally excited about the pipeline of new agents that the group continues to compile.

Speaker 3: Our company-managed brokerage operation continued to perform well in the quarter.

Our company managed brokerage operation continue to perform well in the quarter.

Speaker 3: Operating revenue per load increased 10.1% to $1,976 per load.

Operating revenue per load increased 10, 1% to $1976 per load.

Speaker 3: Although the number of loads hauled was down 19.4 percent, we were pleased with our pricing discipline and capacity utilization in a very tight broker market. Although this caps our top line revenue, our discipline allowed the group to obtain a 4 percent operating margin.

Although the number of loads hauled was down 19, 4%, we were pleased with our pricing discipline and capacity utilization in a very tight broker market. Although this kept our topline revenue our discipline allowed the group to obtain a 4% operating margin.

Speaker 6: As we move through the first quarter of 2022, we expect brokerage capacity to remain tight amid record high rates while small carrier and single brokers assess the amount of moves they need to move in a week. We expect a strong SPARC market where it will extend opportunities to capitalize on margin. As mentioned before, we will continue to rationalize margin in front of high revenue growth.

As we move through the first quarter of 2022, we expect brokerage capacity remain tight.

Amid record high rate by a small carrier and single brokers assets the amount assess the amount of moves they need to move in a week, we expect a strong spot market will extend opportunities to capitalize on margin as mentioned before we will continue to rationalize margin in front of high revenue.

Growth.

Speaker 6: Finally, our greatest resource will continue to be the people of Universal Logistics Holdings.

Finally, our greatest resource will continue to be the people of Universal Logistics holdings.

Speaker 3: We were able to onboard nearly 2,000 talented associates in 2021, which helped launch, service, and grow new and existing business opportunities.

We were able to onboard nearly 2000 talented associates in 2021, which helped launch service and grow new and existing business opportunity.

Speaker 6: Outside of some launch and labor headwinds, our 2021 fundamentals were strong.

Outside of some launch and labor headwinds, our 2021 fundamentals were strong.

Speaker 6: I truly believe we are entering 2022 with a strong cadence to return value to our shareholders and Irshas.

I truly believe we are entering 2022 with a strong cadence to return value to our shareholders and our associates.

Speaker 3: I would now like to turn this call over to Juce. Juce? Thanks, Tim. Good morning, everyone. Universal Logistics Holdings reported consolidated net income of $16.2 million, or $0.60 per share, on total operating revenues of $467.4 million in the fourth quarter of 2021. This compares the net income of $16.2 million, or $0.60 per share, on total operating revenues of $386 million in the fourth quarter of 2020.

I would now like to turn the call over to Jude Thanks, Tim and good morning, everyone. Universal Logistics Holdings reported consolidated net income of $16 2 million or <unk> 60 per share on total operating revenues of $467 4 million in the fourth quarter of 2021. This compares to net income of 16.

$2 million or <unk> 60 per share on total operating revenues of $386 million in the fourth quarter of 2020 <unk>.

Speaker 4: For the quarter, these items adversely impacted our operating ratio by 230 basis points and were a drag on our earnings of approximately 31 cents per share.

For the quarter. These items adversely impacted our operating ratio by 230 basis points and were a drag on our earnings of approximately 31 per share consolidated.

Five 1% and eight 5% of total operating revenues.

Speaker 4: These metrics compared to 6.1% and 11.4% respectively in the fourth quarter of 2020.

These metrics compared to six 1% and 11, 4% respectively in the fourth quarter of 2020.

Looking at our segment performance for the fourth quarter of 2021, and our contract logistics segment, which includes our value added and dedicated transportation businesses income from operations decreased $5 9 million to $6 1 million on $160 7 million of total operating revenues. This compares to operating income of $12 million on 100.

$33 2 million of total operating revenue in the fourth quarter of 2020.

Speaker 4: Operating margins for the quarter were 3.8% versus 9% last year. As mentioned in Tim's comments and in our release, our contract logistics business incurred a $5 million loss in the third quarter at one of our launches supporting an automotive OEM here in Detroit. For the full year, launch losses and downtime settlements with customers impacted contract logistics operating income by 23.7 million.

Operating margins for the quarter were three 8% versus 9% last year.

As mentioned in Tim's comments and in our release, our contract logistics business incurred a $5 million loss in the third quarter at one of our launches supporting it.

Automotive OEM here in Detroit for the full year launch losses, and downtime settlements with customers impacted contract logistics operating income by $23 7 million.

Speaker 4: This affected or impacted segment operating margins by 380 basis points for 2021.

This affected or impacted segment operating margins by 380 basis points for 2021.

Speaker 4: In our intramodal segment, operating revenues increased $35.8 million to $141.7 million compared to $105.9 million in the same period last year. And income from operations increased $6 million to $13.8 million. This compares to operating income of $7.8 million in the fourth quarter of 2020.

Income of $3 5 million in the fourth quarter of 2020.

The trucking segment recorded a $6 million charge for auto liability claims expected to settle over policy limits.

Speaker 4: These charges adversely impacted the trucking segment's operating margin by 590 basis points for the quarter.

These charges adversely impacted the trucking segments operating margin by 590 basis points for the quarter.

And our company managed brokerage segment operating revenues for the quarter declined $3 8 million to $62 million compared to $65 8 million in the same quarter last year, while net income from while income from operations increased $2 3 million to $2 5 million. This compares to operating income of 200000 in the fourth quarter of 2020.

Speaker 4: This compares to operating income of $200,000 in the fourth quarter of 2020. Operating margins for the quarter were 4% versus 3 tenths of 1% last year.

Operating margins for the quarter were 4% versus three tenths of 1% last year.

Speaker 4: On our balance sheet, we held cash and cash equivalents totaling $13.9 million and $8 million of marketable securities. Outstanding debt, outstanding interest bearing debt, net of $1.1 million of debt issuance costs, totaled $427.3 million at the end of the period. Excluding lease liabilities related to ASC 842, our net interest bearing debt to reported EBITDA was 2.4 times.

On our balance sheet, we held cash and cash equivalents totaling $13 9 million and $8 million of marketable securities.

Standing debt outstanding interest bearing debt net of $1 $1 million of debt issuance cost totaled $427 3 million at the end of the period, excluding lease liabilities related to ASC 842, our net interest bearing debt to reported EBITDA was two four times.

Expecting capital expenditures to be in the $80 to $90 million range and interest expense to come in between 15 and $18 million.

Based on the current operating environment for the first quarter of 2022, we're expecting topline revenues between $430 and $450 million and operating margin in the seven 5% to eight 5% range.

Speaker 4: For the full year of 2022, we are expecting total operating revenues between $1.8 and $1.9 billion and operating margins in the 8 to 9 percent range.

For the full year of 2022, we're expecting total operating revenues between one eight and $1 9 billion and operating margins in the 8% to 9% range and.

Speaker 4: And finally, our Board of Directors declared Universal's 10.5 cents per share quarterly dividend. This quarter's dividend is payable to shareholders of record at the close of business on March 7, 2022, and it's expected to be paid on April 4, 2022. With that, Justin, we're

And finally, our board of directors declared Universal's 10, five per share quarter quarterly revenue quarterly dividends. This quarter's dividend is payable to shareholders of record at the close of business on March seven 2022 and is expected to be paid on April four 2022.

With that Jonathan we are ready to take some questions.

And thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press. The pound key please standby will be compile the Q&A roster and our first question comes from Chris Wetherbee from Citigroup Your line.

It is now open.

Speaker 2: Chris, your line is now open. If your phone's on mute, could you please unmute it?

Chris Your line is now open if your phones on mute could you. Please mute it.

Okay.

Speaker 2: And our next question is going to come from Bruce Chan from Stiefel. Your line is now open.

And our next question is going to come from Bruce Chan from Stifel. Your line is now open.

Hey, good morning, everybody and thanks for taking the questions here.

Maybe just want to start with what's going on around.

The border.

Obviously, some shutdowns on the ambassador bridge, we've heard about some Oems closing plants as a result, so just wanted to see whether thats, having a material impact on your operations and what you sort of expect there as far as the first quarter is concerned.

Speaker 6: Yeah, Bruce, this is Tim. Thanks for the question. Yeah, we have we have seen a little bit of disturbance as a result of the border blockade.

Yes, Bruce this is Tim Thanks for the question, Yes, we have we have seen a little bit of disturbance as a result of the border blockade.

Speaker 6: There's been no complete shift shutdown, but there's been some short shifting at a couple of the facilities that we

Note, a complete shift shutdown, but theres been some short shifting at a couple of facilities that we service.

Speaker 6: We hope that there's some result to that in the near future, meaning today.

We hope that there is some results of that in the near future, meaning today.

Speaker 6: The autos have been communicated that they're going to continue to push production. They've had to come up with some various means of getting parts across the border.

The autos have been communicated that they're going to continue to push production. It had to come up with some various means of getting parts across the border.

Speaker 6: But I see this as being this week.

I see this.

See this as being this week blip on the radar and we'll continue to push forward with I think to be a very good first quarter.

Speaker 6: blip on the radar, and we'll continue to push forward with what I think to be a very good.

Speaker 5: Okay, great. I appreciate that color and just maybe sticking with contract logistics here with something to get a little more color on the $5 million charge. Is that a new facility? Is that the same kind of facility or contract that was kind of causing the headache for the majority of 2021?

Okay, Great I appreciate that color and just maybe sticking with contract logistics here I was hoping to get a little more color on the $5 million charge.

Is that a.

New facility is that the same kind of facility or contract that was kind of causing the headache for the majority of 2021.

Speaker 3: Yeah, that that is the same facility that was charging some of the headaches for 2021 from an operating standpoint. We have seen some progress on the facility itself. There were some other associated charges in that 5 million dollars in the 4th quarter.

Yes that is the same facility that was charging some of the headache for 2021.

Speaker 3: And we've been working with the customer to rationalize process, operation, wage inflation.

Speaker 3: The talks are continued and ongoing as recent as just a couple days ago, so it's our hope.

The targets are continued and ongoing.

Recent as just a couple of days ago. So it is our hope.

Speaker 8: as we push through this to get some pricing in place that allows us to take it to the next step so we are returning value and not spinning our wheels.

As we pushed through this to get them to get some pricing in place that allows us to take it to the next step. So we are returning value and not spinning our wheels.

Speaker 5: Okay, got it. And I imagine, you know, visibility is tough on the whole chip shortage issue, but, you know, is there any color that you've gotten from your customers as far as, you know, what their expectations are on, you know, kind of return to normalcy? And then, you know, once that happens, can you maybe just give us a reminder of what comes back in terms of variable cost? Or are we just going to see, you know, essentially pure leverage on top here when volumes come back?

Okay got it and I imagine visibility is tough on the whole chip shortage issue, but is there any color that you've gotten from from your customers as far as what their expectations are off kind of return to normalcy and then once that happens can you maybe just give US a reminder of what comes back in terms of variable costs.

Or are we just going to see essentially pure leverage on top here when volumes come back.

Speaker 3: Yeah, I would say there's some leverage on top of quarter one when we see some of this come back. The problem is...

Yes, I would say there is some leverage on top of quarter. One when we see some of that has come back. The problem is we do get visit bits and pieces of what's going on with the chip shortage I don't know if sometimes if they have the full stream of whats holding up some of their their chips for production and what I've learned is chips going into a lot of different pieces and parts.

Speaker 6: We do get bits and pieces of what's going on with the chip shortage. I don't know sometimes if they have the full stream of what's holding up some of their chips for production, and what I've learned is chips go into a lot of different pieces and parts.

Speaker 6: So some of the associated pieces and parts that we see inbound for the plant could have a chip that's holding it up or it could just be a raw material event with the part. But there's definitely been some disturbance on that level.

So some of the associated pieces and parts that we see inbound for the plant could have a chip that's holding it up or could this be a raw material.

Event with apart, but there is that there has definitely been there.

Theres definitely been some disturbance on that level and the area, where we find ourself, if we want to call. It that lucky the plants that we service are the product that is of high demand. So they are funneling parts and chips.

Speaker 6: The area where we find ourselves, if we want to call it that lucky, the plants that we service are of the product that is of high demand, so they are funneling parts and chips.

Speaker 6: into those plants, so we see a pretty regular overall production schedule. Now, we still have had the disturbance, as we just spoke about in Detroit, they still have struggled to get up to the production level that they want to be, and some of that is probably their own internal doing, but the other piece of it is just the flow of parts as it comes in on a regular basis. So I expect...

Into those plants, though we see a pretty regular overall production schedule now we still have had the disturbance as we just spoke about in Detroit. They still have struggled to get up to the production level that they want to be and some of that probably their own internal doing but the other piece of it is just the flow of parts as it comes in.

On a regular basis. So I expect if you would ask me that like I said in my comments, the first quarter, we will still see some.

Speaker 6: If you would ask me, like I said in my comments, the first quarter, we'll still see some hit and miss on parts. I would hope that as the year progresses, we see a better fluency. If we look at what our production predictions are, they're solid, but to be solid, you've got to have the chip.

Hit and Miss on part I would hope that as the year progresses, we see a better affluent fluency. If we look at what our production predictions are they are solid but to be solid you've got to have the chip and you got to have the people to write so we all face that people got to be there to put the.

Speaker 6: And you've got to have the people, too, right? So we all face that. The people have got to be there to put the vehicle together. And we have to have the park flow. So there will still be some short-term disturbances.

The vehicle together and we have to have the park slope, so theres still there'll be some short term disturbance.

Got it and then maybe just two more quick ones here.

Good to see the new customers coming in on the contract logistics side.

<unk> refined the portfolio a little bit as.

As you think about launching those facilities can you maybe just give us some flavor on what the margin headwind is as you ramp and when you expect that to kind of fade and normalize.

Speaker 6: Yeah, on the first one that I mentioned, which is in our dedicated contract logistics group, I think we've rationalized the agreement along with the market when it comes to wage inflation. I think we'll enter that in a good space, in a good spot. I think that on this particular transition of services, we will hit the ground running hard in the latter part of Q1. I would think by the time we get through the middle of Q2.

Yes.

The first one that I mentioned.

Which is in our dedicated contract logistics group.

We've rationalized the agreement along with the market when it comes to wage inflation I think will enter that in a good space in a good spot I think that on this particular transition of services, we will hit the ground running hard and.

In the latter part of Q Q1, I would think by the time, we get through the middle of Q2, we're up and running as we had lived there for the last 10 years. That's my hope that's what the troops have been directed and Thats been our communication and collaboration with our customer.

Speaker 6: We're up and running as we have lived there for the last 10 years. That's my hope. That's what the troops have been directed. And that's been our communication and collaboration with our customer.

Speaker 6: The launch for the aerospace customer on the contract logistics value-added space, we expect a little bit of a soccer.

The launch for the aerospace customer.

Contract logistics value added space.

We expect a little bit of a softer launch we are comfortable right now with with with what we've priced into it from a labor standpoint, we are working working towards that launch at the beginning of second quarter I would expect that that will take a little bit longer to get up to full run rate. So our expectation is there could be a.

Speaker 6: We are comfortable right now with what we've priced into it. From a labor standpoint, we are working towards that launch the beginning of second quarter. I would expect that that will take a little bit longer to get up to full run rate. So our expectation is there could be a little bit of a disturbance.

Speaker 3: beginning of the second quarter with launching that. But I don't expect to be any kind of pickup like we hit with the latter one we just mentioned.

Little bit of a disturbance beginning of the second quarter with launching that but I don't expect to be any kind of hiccup like we hit with the latter one we just mentioned in Detroit.

And starting to see people locked in contracts for normal durations.

Speaker 9: Well, in our largest customer sector, yes, we just went through a couple rounds of the contract negotiations and pricing.

Well in our largest customer sector, yes.

Went through.

A couple of rounds of the contract negotiations and pricing they are locking rates in for the year or are there are larger customers and yes. There is a lot of wage inflation a lot of <unk>.

Speaker 3: They are locking rates in for the year on our larger customers and yes, there is.

Rising inflation on that and we've been working through that I would say that there's still customers out there that are doing short term type bids or we're pricing things out quarterly so theres still some of that in the marketplace and I think that we will see that into the near future.

Speaker 3: in the marketplace and I think that we'll see that into the near future.

Speaker 10: Okay, great. Well, I appreciate that caller as always and congratulations on making the best of a tough year. Thanks for everything.

Okay, great well I appreciate the color as always and congratulations on making the best of a tough year.

Thanks, Barry Thank you.

And thank you.

And if you have a question.

In Star one again, if you'd like to ask a question that is star one.

Our next question comes from Chris Wetherbee from Citigroup, Chris Your line is now open.

Speaker 7: Hey, thanks. Good morning guys. This is Eli Winski on for Chris. Thank you for all the technical difficulties earlier. Maybe we can start with intermodal. So just curious what you guys are expecting in terms of the CapEx side of that, taking delivery. I know it's hard to look at it with the congestion right now. And then maybe we can talk about the box from side of that. And then just to tap onto that same question, what do you guys think that if a normalized revenue per load in intermodal could look like?

Hey, Thanks. Good morning, guys. This is Ely with Dr. Chris.

Thanks for all of Us.

Technical difficulties earlier, maybe we can start with intermodal. So just curious what you guys are expecting in terms of the capex side of that taking delivery I know, it's hard to look at it with the <unk>.

Congestion right now.

And then maybe if you could talk about the Boston side of that and then just to tack on to that same question.

I think a normalized revenue per load in intermodal look like throughout the year. Thanks.

Speaker 11: Well, some of your first part of your question broke up. I did hear the last part you were looking at. You said something toward the extent of normalized load revenue.

While some of your first part of your question broke up I did hear the.

The last part you were looking at you said something towards the extent of normalized load revenue.

Speaker 4: Yeah, so we could start there I guess, just that one and then what you guys think that the box turns could be and what container CapEx might look like throughout 2022. Thanks.

Yes, so we could start there I guess just that one and then what you guys think that the box turns could be and what container capex might look like throughout 2022.

Speaker 12: Right. Well, let's start with that. I think the revenue per load will, as it stands right now, will hold strong. We haven't seen any deterioration in that.

Well, let's start with that I think the revenue per load will as it stands right now will hold strong we haven't seen any deterioration in that in fact, our pricing initiatives are just the opposite we're still pushing for.

Speaker 3: In fact, our pricing initiatives are just the opposite. We're still pushing for, you know, premium pricing because of the congestion levels that we're experiencing around the country. The fluencies really hurt the productivity of the driver and contractor, and not to mention the options that we have out there in the various transportation spaces.

Premium pricing because of the congestion levels that we're experiencing around the country. The fluency is really hurt the productivity of the driver and contractor and not to mentioned the options that we have out there in the various transportation spaces. So I think I think that what we will see.

Speaker 13: So, I think that what we'll see is similar to what we're seeing now, or maybe even a tad better. When it does come down to earth, as you put it, I'm sure we'll see some reduction, but I think some of this pricing outside of some of the spot accessorials is here to stay for at least the near term of this year.

It's similar to what we're seeing now or maybe even a tad better.

It does when it does come down to Earth as you'd put it I'm sure we will see some reduction, but I think some of it some of this pricing outside of.

Some of the spot at the soils is here to stay for at least the near term this year.

Speaker 4: And on the CapEx side, so for 2022, we don't buy the 53-foot boxes, all we buy are chassis.

And on the Capex side. So for 2022, we don't buy a 53 foot boxes, all we buy our chassis because.

As we are primarily in the international box market and not at the domestic box market. So we're currently planning on buying <unk>.

Somewhere between 250 to 500 chassis, depending on availability, so somewhere between $8 million to $15 million box. The high end, if we can get them, but based on what we're hearing right now most likely on the lower end of that about half that about 250, which would be about 8 million Bucks.

Yes that makes sense. Thank you maybe we can turn to the dedicated side you guys said youre going to bring on 150, new drivers can you talk about what that process. It looked like so far and just what the hiring environment looks for it looks like for you guys right now.

Speaker 6: Yeah, definitely. You know, you would think as we went into this, we were pretty up front with ourselves about what we were going to be able to do from a hiring process. Remember, that's 150 plus drivers in a short period of time is a task.

Yes definitely.

We think as we went into this we were pretty upfront with ourselves about what we were going to be able to do from a hiring process remember that 150 plus drivers in a short period of time is a task.

Speaker 6: I'm very optimistic about where we are in the process right now, because we price this thing accordingly to be successful, maybe even to set some of the wage rate in the market to capitalize on that driver recruiting, and up until this point, I'll tell you that I've been very optimistic about our cadence of bringing on new talent, so I don't think anything out there at this point that disturbs the cadence of the launch. The launch will start in March. We have enough drivers to get through the first phase or two of the launch.

Very optimistic about where we are in the process right now because we price. This thing accordingly to be successful maybe even to set some of the wage rate in the market to capitalize on that driver recruiting and up into this point I will tell you that I've been very.

Speaker 14: And I'm extremely optimistic by the time we get to the end of the launch, which is over a three or four week period, we will have every driver and every seat.

Extremely optimistic by the time, we get to the end of the lines, which is over three or four week period. We will have every driver in every seat equipments out there. We're ready to go that's why I think that there'll be a very quick implementation into it and this is something we have a lot of experience with <unk>.

Speaker 3: Equipment's up there. We're ready to go. That's why I think this will be a very quick.

Speaker 3: implementation into it, and this is something we have a lot of experience with. We provide the same type of services at a couple other major facilities, so expertise is there. The launch team is there. I just feel good about it. I feel good about it in a rough labor market, too, so. That makes sense. Thanks for the time, guys.

We provide the same type of services had a couple of other major facilities. So expertise is there the launch teams there I just feel good about it I feel good about it and are up labor market too so.

That makes sense. Thanks for the time guys I appreciate it thank you.

Okay.

Speaker 2: Ed, thank you, and I'm showing no further questions. I would now like to turn the call back to Tim Phillips for closing remarks.

And thank you and I'm showing no further questions I would now like to turn the call back to Tim Phillips for closing remarks.

Speaker 15: Well, thanks for calling in, and I can assure you Universal is going to be focusing on our people, continuing pricing, uniformity of process, technology, and last but not least, safety as we go through 2022. I appreciate you calling in and look forward to talking to you very soon. Thank you.

Well, thanks for calling in and I can assure you universal is going to be focusing on our people continuing pricing uniformity and process technology and last but not least safety as we go through 2022 I. Appreciate you calling in and look forward to talking to you very soon thank you.

Speaker 16: This concludes today's conference call. Thank you for participating, and you may now disconnect.

This concludes today's conference call. Thank you for participating and you may now disconnect.

Q4 2021 Universal Logistics Holdings Inc Earnings Call

Request a DemoDemo

ULH

Universal Logistics Holdings

Earnings