Q4 2023 Universal Logistics Holdings Inc Earnings Call
[music].
Operator: Hello and welcome to Universal Logistics Holdings' fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Hello, and welcome to Universal Logistics Holdings fourth quarter 2023 earnings Conference call.
At this time all participants are in a listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. A 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 best view of the business as seen today. Statements that are forward-looking relate to Universal's business objectives or expectations and can be identified by the use of the words such as belief, expect, anticipate, and project. Such statements are subject to risks and uncertainties, 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 hosts, Mr. Tim Phillips, Chief Executive Officer, Mr. Jude Beres, Chief Financial Officer, and Mr. Stephen Fitzpatrick, Vice President of Finance and Investor Relations. Thank you, Mr. Phillips. You may begin.
Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
A question and answer session will follow the formal presentation.
During the course of this call management May make forward looking statements based on their best view of the business as seen today.
Statements that are forward looking relate to universal's business objectives or expectations and can be identified by the use of the words such as belief expect anticipate and project such statements are subject to risks and uncertainties 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 Mr. Tim Phillips, Chief Executive Officer, Mr. Jude Bears Chief Financial Officer, and Mr. Steven Fitzpatrick, Vice President of Finance and Investor Relations. Thank you. Mr. Phillips you may begin.
Thank you Gary and good morning, and welcome to Universal Logistics Holdings' 2023 fourth quarter earnings call.
Tim Phillips: Thank you, Gary, and good morning and welcome to Universal Logistics Holdings' 2023 fourth quarter earnings call. Once again, Universal's diverse service offerings continue to differentiate us in the transportation and logistics space and provide a stable earning space for the organization in a changing trade environment. While we await a rebound in the transportation market that has been bumping along the bottom the past few quarters, we are pleased with the continued resiliency and performance of our contract logistics segment. Being deeply rooted in our customers' ecosystems has given us the opportunity to inject additional value, consistency, and visibility into their supply chain, which in turn demonstrates our strong business proposition and affords us tremendous opportunities for growth. In 2024, it remains our goal to streamline operations within our transportation segment, focusing on cost reductions, which extend additional value to our customers while continuing to produce consistent margins that fuel our future growth. We continue to see excellent opportunities in the contract logistics space to simplify customers' logistics complexities while simultaneously showcasing cost savings and reliability. Our people-driven solutions require great talent armed with state-of-the-art technology.
Once again Universal's diverse service offerings continued to differentiate us in the transportation and logistics space and provide a stable earnings base for the organization in a changing trade environment.
While we await a rebound in the transportation market that has been bumping along the bottom in the past few quarters.
We're pleased with the continued resiliency and performance of our contract logistics segment.
Being deeply rooted in our customers' ecosystem has given us the opportunity to inject additional value consistency and visibility into their supply chain, which in turn demonstrates our strong business proposition.
It was a tremendous opportunity for growth.
In 2024, it remains our goal to streamline operations within our transportation segment, focusing on cost reductions, which extended additional value to our customers, while continuing to produce consistent margins that fuel our future growth.
We continue to see excellent opportunities in the contract logistics space to simplify customers' logistics complexities.
Simultaneously showcasing cost savings and reliability.
Our people driven solutions require great talent armed with state of the art technology.
I'm extremely pleased with our build out of the contract logistics team with excellent talent that is focused on continuous improvement and labor management as well as blueprinting, the technical technological needs of our customers to advance our accuracy enhanced visibility.
Tim Phillips: I'm extremely pleased with our build-out of the contract logistics team with excellent talent that is focused on continuous improvement in labor management as well as identifying the technological needs of our customers to advance our accuracy and enhanced visibility. We continue to stress a customer-centric approach that takes best practices while outlining a very individualized solution to our customer-specific needs. We continue to be extremely mindful of cost in our transportation businesses while we ride out the remainder of the inventory de-stocking and other market pressures. It is fair to say the opportunity to deeply evaluate costs has uncovered opportunities that will remain fundamental as we step out of the current environment. Each of our transportation businesses has outlined an operating strategy for 2024 that is focused on customer expansion and low growth while considering lane optimization and service standards.
We continue to stress a customer centric approach that takes best practice, while outlining a very individualized solutions to our customers' specific needs.
We continue to be extremely mindful of cost in our transportation businesses, while we ride out the remainder of the inventory destocking and other market pressures.
It is fair to say the opportunity to deeply evaluate cost has uncovered opportunities that will remain fundamental as we step out of the current environment.
Each of our transportation businesses has outlined and operating strategy for 2024 that is focused on customer expansion and low growth, while contemplating lane optimization and service standards.
Tim Phillips: We will remain vigilant in managing our controllable costs and improving operational efficiency in every aspect of our business. The outlook for 2024 remains a bit murky, with a variety of signals from various market verticals. When we're not ready to predict a rise in volume from the current environment, we can't explore potential pathways through the lens of our, The prognostication throughout the earnings season favors an uptick in the second half of 2024, which we also believe to be a possibility, but we need to see a meaningful movement in imports to help support the story. Import dredge moves and our network were flat sequentially but did show We will closely watch the low count in the first part of the year to support any material inventory restocking cycle that could be a catalyst for returning our transactional trucking businesses to their historic margins. Initial indications in the automotive space point to a production cadence similar to 2023.
We will remain vigilant on managing our controllable costs and improving operational efficiency in every aspect of our business.
The outlook for 'twenty 'twenty, four remains a bit murky with variety of signals from various market verticals.
Well, we're not ready to predict a rise in volume from the current environment, we can explore potential pathways through the lens of our customers.
The prognostication throughout the earnings season favors an uptick in the second half of 'twenty 'twenty, four which we also believe to be a possibility.
But we need to see a meaningful movement in imports to help support the story.
Important drayage moves in our network were flat sequentially.
But did show a slight uptick over Q4 2022.
We will closely watch the low count in the first part of the year to support any material inventory restocking cycle that could be a catalyst for returning our transactional trucking businesses.
Their historic margins.
Initial indications in the automotive space points of production cadence similar to 2023.
Tim Phillips: Class A trucks, which had a robust year in 2023, and expectations are for some reduction in truck production in 2024. Projections remain a mixed bag with our heavy equipment agriculture customers, but we do expect solid contributions to 2020-2024 revenues. Universal continues to build on our current customer footprint, leveraging our sales efforts across the enterprise.
Class eight trucks, which had a robust year in 2023 and expectations are for some reduction in truck production in 2024.
Projections remain a mixed bag with our heavy equipment and agriculture customers, but do we do expect solid contributions to 2020, 'twenty 'twenty 'twenty four revenue stream.
Universal continues to build on our current customer footprint.
Leveraging our sales efforts across the enterprise.
Tim Phillips: Sales leadership has strategically outlined the blueprint of cross-sale opportunities between our various operating divisions. Our pipeline of new customer prospects remains robust with both new and cross-sale opportunities. We are extremely excited about sales opportunities within our current customer base as we look to build our transportation and logistics network in Mexico. A renewed focus on nearshoring has confirmed our need to expand with our current customers at a nimble pace.
Sales leadership is strategically outlined a blueprint of cross sell opportunities between our various operating segments.
Our pipeline of new customer prospects remain robust with both new and cross sell opportunities.
We are extremely excited with sales opportunities within our current customer base as we look to build our transportation and logistics network in Mexico.
Our renewed focus on near shoring has confirmed our need to expand with our current customers at a nimble pace.
We remain committed to solving the customer's most complicated issues, while evaluating the opportunity for fit within our various operating networks.
Tim Phillips: We remain committed to solving the customer's most complicated issues while evaluating the opportunity for fit within our various operating networks. As previously mentioned, our diversified operating footprint continues to produce balanced results. Contract Logistics led the way, producing exceptional results for our asset-based truckload business with a variable cost model delivering MUTA results in Q4. Although lagging our expectations, we remain confident in the foundation of our intermodal and company-managed brokerage segment. Any incremental volumes and improvement in efficiencies will further drive the results in these businesses. Leadership has outlined strong 2024 strategic plans for the organization and is deeply focused on Now for the quarter.
As previously mentioned our diversified operating footprint continues to produce balanced results.
Contract logistics led the way producing exceptional results, while our asset based truckload business with a variable cost model delivered muted result in Q4.
Although lagging our expectations, we remain confident in the foundation of our intermodal and company manage brokerage segments.
Any incremental volumes and improvement of inefficiencies will further drive the results in these businesses.
Leadership is outlined strong 'twenty 'twenty four strategic plans for the organization and are deeply focused on executing.
Now for the quarter.
Tim Phillips: In yesterday's release, Universal reported 2023 fourth-quarter earnings of 81 cents per share on total operating revenues of $390.2 million. Our operating margins fell in line with Q4 estimates, while operating revenues came in slightly above. Although behind our Q4 2022 results, Q4 2023 was the second-best fourth quarter on record for operating income, and 2023 as a whole was the second-best year ever for operating income and EPS. Now for some color on each of our services.
In yesterday's release, Universal reported 2023 fourth quarter earnings at <unk> 81 per share on a total operating revenues of $390 2 million.
Our operating operating margins fell in line with Q4 estimates why operating revenues came in slightly above.
Although behind our Q4 2020 Twos result, Q4, 2023 was the second best fourth quarter on record on record for operating income and 2023 as a whole was the second best year ever for operating income and EPS.
Now for some color on each of our service lines.
Tim Phillips: In our contract logistics segment, the number of active value-added programs continues to increase and finish the quarter at 71 programs. We continue to launch new programs in a variety of verticals. We continue to have demand from both existing and new customers for inbound material velocity solutions. We were able to showcase our technology and people in real time while outlining the value of a single provider between transportation and warehouse management. 2023 Class A production levels exceeded the previous year with year-end figures in the neighborhood of 336,000 units versus 315,000 units in 2022. The SAR remained very similar, both in Q4 and 2023 as a whole. Q4 productions of plants we service were negatively affected by the UAW strike and estimated to have cost the company, someone in their neighborhood, $2.2 million in missed operating income. However, the overall impact of the UAW strike against the Big Three was less impactful than expected as many of the plants we serviced were not affected.
And our contract logistics segment, the number of active value added programs continued to increase and finished the quarter at 71 programs.
We continue to launch new programs and a variety of verticals.
We continue to have demand from both existing and new customers for our inbound materials velocity solutions.
We were able to spotlight, our technology and people in real time, while outlining the value of a single provider between transportation and warehouse management.
2023 class eight production levels exceeded the previous year with year end figures in the neighborhood of 336000 units versus 315000 units in 2022.
While the Saar remained very similar both Q4 and 2023 as a whole.
Q4 production at the plants, we service were negatively negatively affected by the UAW strike and estimated to have cost the company someone the neighborhood of $2 2 million and missed operating income.
The overall impact of the UAW strike against the Big three was less impactful than expected as many of the plants. We service were not affected.
Our sales pipeline is filled with prospective customers in a variety of verticals, including automotive.
Tim Phillips: Our sales pipeline is filled with prospective customers in a variety of verticals, including automotive, Agriculture, and Class A Trucks. We did successfully launch one major customer in Mexico in Q4 and are prepared for several launches in January or have several launches in January of 2024. The dedicated transportation group remained very stable throughout 2023, providing a high-velocity platform that syncs closely with complex inbound material manufacturing needs. Our dedicated segment is focused on yard management, local shuttles, and regional work.
Agriculture and class eight trucks.
We did successfully launched one major customer in Mexico in Q4 and are prepared for several launches in January or had several launches in January of 'twenty 'twenty four.
Okay.
The dedicated transportation group remained very stable throughout 2023, providing high velocity platform that things closely with complex inbound material manufacturing needs.
Our dedicated segment is focused on yard management local shuttles and regional work.
Tim Phillips: Over the past three years, we have had organic-focused growth strategies. We have made significant investments in new tractors and trailing equipment that have given us the ability to scale and attract drivers, up over 57% from the end of 2021. We remain confident in our operating model, which provides an extremely high level of service made possible by an experienced team of seasoned professionals.
Over the past three years, we have had organic focus growth strategy, we have made significant investments in new tractors and trailing equipment.
It has given us the ability to scale and attract drivers.
Up over 57% from the end of 2021.
We remain confident in our operating model, which provides an extremely high level of service made possible by by by an experienced team of seasoned professionals.
Revenue for the quarter was up slightly driven by five new launches in 2023, two of which were in Q4. We are extremely excited about the Q4 launches, which continued our growth with a significant dedicated automotive opportunity in central Mexico.
Tim Phillips: Revenue for the quarter was up slightly, driven by five new launches in 2023, two of which were in Q4. We are extremely excited about the Q4 launches, which continued our growth with a significant dedicated automotive opportunity in Central Mexico, followed by a late-quarter start with a large agricultural manufacturer in the Southeast United States. Offsetting some of the new business revenue with a drop in operating revenue at several of our operations servicing the automotive industry, the lack of six-day operations during the UAW strike were key contributors. Our dedicated model continues to attract attention with a healthy pipeline of new opportunities and several launches slated for Q1 of 2024. Meanwhile, our Intermodal Drains Group continues to navigate a restricted import environment, as previously mentioned.
Followed by a late quarter start with a large agricultural manufacturer in the southeast United States.
Offsetting some of the new business revenue was a drop in operating revenue at several of our operations servicing the automotive industry.
Lack of six day operations and the UAW strike were key contributors.
Our dedicated model continues to attract attention with a healthy pipeline of new opportunity and several launches slated for Q1 of 2024.
Our intermodal Drayage group continues to navigate a restricted import environment has previously mentioned.
Tim Phillips: Pricing and volume continue to be the storylines, with slight sequential deterioration of revenue, which is driven by seasonality. While load count was up 1.8%, this was more than offset by a 19.9% decline in revenue per load x fuel, as the market remained extremely competitive. The segment will also be watching the drama in the Red Sea and the increased sale time as it affects ships' arrivals and potential inventory levels. Meanwhile, the Panama Canal continues to give shippers problems with transiting the route due to water levels.
Pricing and volume continued to be the storyline with slight sequential deterioration of revenue.
Which is street driven by seasonality.
While load count was up one 8% this was more than offset by a 19.9% decline in revenue per load ex fuel as the market remain extremely competitive.
This segment will also be watching the drama in the Red Sea and the increased sale time as it affects shifts arrivals and potential inventory levels.
The Panama Canal continues to give shippers probably transiting the route due to water levels.
Tim Phillips: In the ever-changing geopolitical landscape, our intermodal franchise is ready to serve our customers' needs on the East Coast or on the West Coast. Overall, top-line revenue was down 30.6% due to depressed freight rates, as well as non-driver-related accessorials. However, assessorials continued their steep decrease as ocean voids remained in deficit and supply chains were fluid.
In the ever changing geopolitical landscape, our intermodal franchise is ready to serve our customers' needs on the east coast or on the West coast.
Overall top line revenue was down 36% due to depressed freight rates as well as non driver related as the soils.
As the stores continue their steep decrease as ocean volumes have remained in deficit and supply chains where fluid.
Tim Phillips: Accessorial charges declined by 61%, or $13.8 million, and the fuel surcharge declined 42%, or $9.4 million. While we have made positive traction with our Southern California operation, it continues to be a drag on overall results. Southern California rates remain muted and were challenged sequentially in Q4.
As the soil charges declined over 61% or $13 8 million and for fuel surcharge declined 42% or $9 4 million.
While we have made positive traction with our southern California operation. It continues to be a drag on overall results.
Southern California rates remained muted and we're challenged sequentially in Q4, we.
Tim Phillips: We continue to optimize the fleet size and driver base by evaluating our lanes, our port turn times, and our driver utilization. Losses in a number of our California operations negatively impacted our EPS by $0.13 per share. Despite these current headwinds, our long-term strategy of having a strong West Coast Intermodal President remains undeterred.
We continue to optimize the fleet size and driver base way of evaluating our lanes or port turn times and are driving utilization.
Losses in a number of our California operations negative negatively impacted our EPS by <unk> 13 per share.
Despite these current headwinds our long term strategy of having a strong west coast intermodal President remains undeterred.
Tim Phillips: We are preparing to introduce new trucks to all of our California operations in 2024, which will offer additional truck efficiency and repair savings. The new truck order will also include a handful of electric trucks that we will begin incorporating into our operations in the latter part of the year. Our drainage sales pipeline remains full of quality opportunities, which will continue to be bid in an extremely restrictive pricing environment. However, we do believe our intermodal franchise has a competitive advantage as we have an expansive portfolio of operating terminals, parking, and a large fleet of company-owned chassis. Our agent-based trucking segment continued to face headwinds in our van and flatbed modes during the last quarter of the year.
We are preparing to introduce new trucks to all of our California operations in 'twenty, 'twenty, four which will offer additional truck efficiencies and repair savings.
The new truck order will also include a handful of electric trucks.
We will begin incorporating into our operations in the latter part of the year.
Our drayage sales pipeline remains full quality opportunities, which will continue to be bid in an extremely restrictive pricing environment. We do believe our intermodal franchise has a competitive advantage because we have an expansive portfolio of operating terminals parking and a large fleet of company owned chassis.
Our agent base trucking segment continue to face headwinds in our van and flatbed mode. During the last quarter of the year.
Tim Phillips: Our wind transportation also saw a significant and seasonal fall off in revenue from Q3. Industrial goods led the slide in the open deck sector, with steel and metals down sequentially but up slightly in Q4 over Q4 of 22. Consumer goods left a decline on the van side. Overall, load count was down 3.9%, and revenue per load was down 8.6% to $1,673 per load. The overall drop, agent-based brokerage services experienced the steepest falloff, down over 18% compared to 2022.
Our wind transportation also saw a significant and seasonal falloff in revenue from Q3.
Industrial goods led the slide in the open deck sector with steel and metals down sequentially, but up slightly Q4 over Q4 of 22.
Consumer goods led the decline on the van side.
Overall load count was down three 9% and the revenue per load was down eight 6% to $1673 per load.
The agent base overall drop the agent based brokerage services experienced the steepest falloff down over 18% compared to 2022.
Tim Phillips: Top line revenue of $75.2 million was down 15.5% for the quarter, while operating income decreased $3.3 million to $2.5 million compared to $5.7 million last year. Continued flattened band headwinds coupled with a seasonal drop in wind transportation moves led to the decrease. Our agent-based model continues to contribute to the bottom line with its variable cost structure and entrepreneurial spirit. Company-managed brokerage saw top-line revenue drop 29% in the quarter to $28.1 million as headwinds continue in the truckload market. A sluggish freight environment with a muted peak season led to an extremely competitive spot freight environment in the quarter. Spot loads for the quarter were very low, making up roughly 20% of the overall load count.
Topline revenue of $75 2 million was down 15, 5% for the quarter, while operating income decreased $3 3 million to $2 5 million compared to $5 7 million last year.
Continued flattened van headwinds, coupled coupled with a seasonal drop in wind transportation move led to the decreases.
Our agent based model continues to contribute to the bottom line with its variable cost structure and entrepreneurial spirit.
Okay.
Company managed brokerage saw top line revenue dropped 29% in the quarter to 24, $28 1 million.
As headwinds continue in the truckload market.
Sluggish freight environment with muted peak season led to an extremely competitive spot rate environment in the quarter.
Spot loads for the quarter were very low making up roughly 20% of the overall load count.
Tim Phillips: Many opportunities are at or below break-even from a profit standpoint. We continue to align our pricing and selection of freight to give the operations team the best opportunity to make money while shielding load counts. As previously mentioned, depressed pricing coupled with increased carrier operational costs has made the model very difficult to reach margin expectations. Operating revenue per load decreased 15.7% to $1,419 per load, and the load count was down 14.4%.
Many opportunities are at or below breakeven from a profit standpoint.
We continue to align our pricing and selection afraid to give the operations team the best opportunity to make money, while shielding load count.
As previously mentioned depressed pricing coupled with increased carrier operational cost has made the model very difficult to reach margin expectation.
Operating revenue per per load decreased 15, 7% to $1419 per load and the low count was down 14, 4%.
Gross margin increased sequentially to 11, 8%, but was off from Q4 2022 by almost 2%.
Tim Phillips: Growth margin increased sequentially to 11.8%, but it was off from Q4 2022 by almost 2%. Small carriers continue to keep their heads above water, but their costs have remained elevated because of higher truck costs. We have bid roughly 25% of our book of business at various agents in Q4 and are awaiting final awards. Another 25% of our book will be bid in Q1 of 2024. So far, pricing on renewal bids has been flat compared to 2023.
Small carriers continued to keep their heads above water, but they had but that has remained elevated because of higher truck costs.
We have bid roughly 25% of our book of business.
Various agents within Q4 and are awaiting final awards, another 25% of our book.
We will be bid in Q1 of 2024, so far pricing on renewal bids have been flat compared to 2023.
Tim Phillips: We will continue to evaluate our Q1 bids, looking for lanes we can optimize with our current network of carriers to create real load growth. Finally, Universal is committed to delivering long-term value to our customers and our shareholders. We remain focused on growing our high-margin contract logistics business, which produces stable returns over long-term contract periods, while welcoming what we hope will be a climb from the freight basement for our transactional transportation business as 2024 progresses. I'm extremely thankful for the hardworking employees, contractors, and agents who proudly represent Universal every day, while technology continues to enhance the customer experience. It is people who solve problems to expand and nurture relationships.
We will continue to evaluate our Q1 bid looking for lanes, we can optimize with our current network of carriers to create real loan growth count.
Finally, universal is committed to delivering long term value to our customers and our shareholders.
We remain focused on growing our high margin contract logistics business, which produces produces stable returns over a long term contract periods, while welcoming what we hope to be a client from the freight basement for a transactional transportation business as 'twenty 'twenty four progresses.
I am extremely thankful for the hard working employees.
Contractors and agents, who proudly represent universal everyday.
While technology continues to enhance the customer experience.
It is people, who solve problems to expand and nurture relationships.
Universal will continue to celebrate its diverse and creative workforce.
Jude Beres: Universal will continue to celebrate its diverse and creative workforce, which exudes the culture of People Driven Solutions. I would now like to turn the call over to Jude for a detailed view of our financial performance. Thanks, Tim. Good morning, everyone.
Exudes the culture.
People driven solutions.
I would now like to turn the call over to Jude for a detailed view of our financial performance.
Thanks, Tim Good morning, everyone yesterday, Universal Logistics Holdings reported consolidated net income of 21 4 million or <unk> 81 cents per share on total operating revenues of $390 9 million in the fourth quarter of 2023.
Jude Beres: Yesterday, Universal Logistics Holdings reported consolidated net income of $21.4 million, or $0.81 per share, on total operating revenues of $390.9 million in the fourth quarter of 2023. This compares to net income of $33.4 million, or $1.27 per share, on total operating revenues of $458.7 million during the same period last year. Consolidated income from operations was $34.1 million for the quarter, compared to $48.2 million one year earlier. EBITDA decreased $13.2 million to $54.8 million, which compares to $68 million during the same period last year.
This compares to net income of $33 4 million or $1 27 per share on total operating revenues of $458 7 million during the same period last year.
Consolidated income from operations was $34 1 million for the quarter compared to $48 2 million one year earlier EBITDA decreased $13 2 million to $54 8 million, which compares to $68 million during the same period last year.
Jude Beres: Our operating margin and EBITDA margin for the fourth quarter of 2023 are 8.7% and 14% of total operating revenue. These metrics compare to 10.5% and 14.8%, respectively, in the fourth quarter of 2022. Looking at our segment performance for the fourth quarter of 2023, in our contract logistics segment, which includes our value-add and dedicated transportation businesses, income from operations increased $1.9 million to $32.1 million on $201.3 million of total operating revenue. This compares to operating income of $30.1 million on $205.5 million of total operating revenue in the fourth quarter of 2022. Operating margins for the quarter were 15.9% of total operating revenues compared to 14.7% one year earlier. For our intermodal segment, operating revenues decreased $37.7 million to $85.4 million compared to $123.1 million in the same period last year. And income from operations decreased $12.1 million to an operating loss of $944,000.
Our operating margin and EBITDA margin for the fourth quarter of 2023, or eight 7% and 14% of total operating revenues. These metrics compare to 10, 5% and 14, 8% respectively in the fourth quarter of 2022.
Looking at our segment performance for the fourth quarter of 2023, and our contract logistics segment, which includes our value add and dedicated transportation businesses.
From operations increased $1 9 million to $32 1 million on $201 3 million of total operating revenues.
This compares to operating income of $30 1 million on $205 5 million of total operating revenue in the fourth quarter of 2022 operating margins for the quarter were 15, 9% of total operating revenues compared to 14.7% one year earlier earlier.
Onto our intermodal segment operating revenues decreased 37, 7 million to $85 4 million compared to $123 1 million in the same period last year and income from operations decreased $12 1 million to an operating loss of 944000 and this compares to.
Jude Beres: This compares to operating income of $11.1 million in the fourth quarter of 2022. Operating ratios for the quarter were 101.1% versus 91% last year. As mentioned in Tim's comments, our intermodal segments operating results were negatively impacted by operating losses in a number of our West Coast operations. These losses totaled $4.5 million, impacting segment margins by 550 basis points and consolidated results by $0.13 per share.
Operating income of $11 1 million in the fourth quarter of 2022.
Operating ratios for the quarter were 101, 1% versus 91% last year as mentioned in Tim's comments, our intermodal segment's operating results were negatively impacted by operating losses in a number of our west coast operations. These losses totaled four and a half million dollars impacting segment margins.
By 550 basis points and consolidated results by <unk> 13 per share.
Jude Beres: In our trucking segment, operating revenues for the quarter decreased $13.8 million to $75.2 million compared to $89 million in the same quarter last year, and income from operations decreased $3.3 million to $2.5 million. This compares to operating income of $5.7 million in the fourth quarter of 2022. Operating margins for the quarter were 3.3% versus 6.5% last year. In our Company Managed Brokerage segment, operating revenues for the quarter decreased $11.5 million to $28.1 million compared to $39.6 million in the same quarter last year. And income from operations decreased $900,000 to operating income of $9,000.
In our trucking segment operating revenues for the quarter decreased $13 8 million to $75 2 million compared to 89 million in the same quarter last year and income from operations decreased $3 3 million to $2 5 million.
This compares to operating income of $5 7 million in the fourth quarter of 2022.
Operating margins for the quarter were three 3% versus six 5% last year.
And our company managed brokerage segment operating revenues for the quarter decreased 11, 5 million to $28 1 million compared to $39 6 million in the same quarter last year and income from operations decreased 900000 to operating income of 9000 op.
Jude Beres: Operating margins for the quarter were close to break even versus 2.3 percent last year. On our balance sheet, we held cash and cash equivalents totaling $12.5 million and $10.8 million of marketable securities. outstanding interest-bearing debt, net of $4.5 million of debt issuance costs, totaled $381.9 million at the end of the period. Excluding lease liabilities related to ASB 842, our net interest-bearing debt to reported TTM EBITDA was 1.7 times. Capital expenditures for the quarter were $48.5 million. For the full year of 2023, capital expenditures totaled $240.6 million. $124.5 million, or 52% of our total capex for the year, was for strategic real estate purchases. Based on the current operating environment, for the first quarter of 2024, we are expecting top-line revenues between $400 to $420 million and operating margins in the 8 to 10 percent range.
Operating margins for the quarter were close to breakeven versus two 3% last year.
On our balance sheet, we held cash and cash equivalents totaling $12 5 million and $10 8 million of marketable securities outstanding interest bearing debt net of $4 $5 million of debt issuance costs totaled $381 9 million at the end of the period.
Excluding lease liabilities related to ASC 842, our net interest bearing debt to reported TTM EBITDA was 1.7 times.
Capital expenditures for the quarter were $48 5 million for the full year of 2023 capital expenditures totaled $246 million $124 5 million or 52% of our total capex for the year was four strategic real estate purchases.
Based on the current operating environment for the first quarter of 2024, we are expecting top line revenues between $400 million to $420 million and operating margins in the 8% to 10% range for.
Jude Beres: For the full year, we are expecting capital expenditures to be in the $480 to $500 million range and interest expense to come in between $30 to $34 million. 2024 will be a year of significant investment for Universal, so I'd like to break down the CapEx number a little bit. Included in our estimate are two large contract logistics projects that require an upfront capital investment totaling $220 million.
For the full year, we are expecting capital expenditures to be in the 480 to 500 million dollar range and interest expense to come in between $30 million to $34 million.
2024 will be a year of significant investment for universal So I'd like to break down the capex number a little bit.
Included in our estimate are too large contract logistics projects that require an upfront capital investment totaling $220 million.
Jude Beres: We anticipate making this investment over the course of 2024 in anticipation of having these programs ready for a Q1 2025 launch. These two projects account for nearly half of our total anticipated 2024 guide. We are also expecting to invest $70 million in strategic real estate purchases and facility upgrades for our terminal network. These upgrades will primarily support our intermodal operations. The remaining $200 million or so will be for rolling stock, which includes tractors and trailers as well as material handling equipment.
We anticipate making this investment over the course of 'twenty 'twenty, four and anticipation of having these programs ready for a Q1 2025 launch.
These two projects account for nearly half of our total anticipated 2024 guide.
We are also expecting to invest 70 million in strategic real estate purchases and facility upgrades for our terminal network.
These upgrades will primarily support our intermodal operations.
The remaining 200 million or so will be for rolling stock, which includes tractors and trailers as well as material handling equipment.
Jude Beres: Due to the limited availability of transportation equipment in recent years, over half of this spend is to get us back on our normal tractor replacement cycle. We anticipate using a combination of cash generated by operations, availability on our revolving lines of credit, as well as equipment and real estate notes to fund our planned CAP Act. Finally, on Wednesday, our Board of Directors declared Universal's $0.105 per share regular quarterly dividend. This quarter's dividend is payable to shareholders of record at the close of business on March 4, 2024, and is expected to be paid on April 1, 2024.
Due to the limited availability of transportation equipment in recent years over half of the spend is to get us back on our normal tractor replacement cycle, we anticipate using a combination of cash generated by operations availability on our revolving lines of credit as well as equipment and real estate notes to fund our planned cap.
<unk>.
Finally, Wednesday, our board of directors declared Universal's 10, and a half cent per share regular quarterly dividend. This quarter's dividend is payable to shareholders of record at the close of business on March four 2024 and is expected to be paid on April 1st 2024 with that Gary we're ready to take some questions.
Operator: With that, Gary, we're ready to take some questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.
<unk>.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Operator: To draw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question today is from Bruce Chan with Stiefel. Please go ahead. Thank you, operator. Good morning, everyone.
At this time, we will pause momentarily to assemble our roster.
Our first question today is from Bruce Chan with Stifel. Please go ahead.
And thank you operator, and good morning, everyone. Tim you talked about some of the drayage trends and the disruption coming with the Red Sea in the Panama Canal issues, just wondering if you've seen any change in volume trends. So far this year as a result of those issues and then you know maybe just a follow up quickly and we've got some potential.
Bruce Chan: Tim, you talked about some of the drainage trends and the disruption coming with the Red Sea and Panama Canal issues. I was just wondering if you've seen any change in volume trends so far this year as a result of those issues. And then, you know, maybe just to follow up quickly, we've got some potential ILA disruptions and negotiations coming up as well. Any early conversations with customers about, you know, some of the relocation and diversion that may happen as a result? Yeah, thanks, Bruce. From a DRAGE perspective, when it relates to the Red Sea, no, we've had no real hiccups from a volume standpoint. What we've been told by our customers is that they understand if they're not going to change port routing, they're going to experience a longer sale time, anywhere between probably 10 to 12 days longer. And they're just setting themselves up to absorb that as it goes so far.
I L a disruption and negotiations coming up as well any early conversations with customers about.
Some of the relocation and diversion that may happen as a result.
Yeah. Thanks Bruce.
From a drayage perspective, when it relates to the Red Sea No. We've had no real hiccups from a volume standpoint, what we've been told by our customers is that they understand if theyre not going to change port writing, they're going to experience a longer sale time anywhere between probably 12 10 to 12 days.
Longer and there just are setting themselves up to absorb that as it goes so far you know that's one area, where we feel we're where we're really well acclimated because if they do decide to push up.
Tim Phillips: You know, that's one area where we feel we're really well acclimated because if they do decide to push freight to the West Coast, we feel we have a good catch net there with all our terminals that operate up and down the West Coast to catch that potential volume that could be redirected. I would say that I have not heard a lot on the ILA potential this summer with the contract renewal for work disruption, but I would say the same thing holds true there. As our customers look at their supply chains, and we prepare ourselves should freight shift as it kind of did when we had the ILWU disruption on the west coast, the same thing could potentially happen here with an east to west shift. So we feel good about what we have in place to be able to serve our customers. Okay, I got it. That's, that's very helpful.
For the West Coast, we feel we have a a good.
Catching up there with all of our terminals that operate up and down the west coast. The contest that potential volume that can be redirected.
I would say that I have not heard a lot on it.
L. A potential this summer when the contract renewal for work disruption, but I would say the same thing holds true there as our customers look at their supply chain.
<unk> pivot then we're going to be there to catch the freight on the other coast or potentially.
The Gulf region, if that would delay into the plan, but we're definitely <unk>.
Preparing ourselves.
It should frame shift as it kind of did when we had I L. W. U disruption on the West coast.
The same thing could potentially happen here with an east to west shift. So we feel good about what we have in place to be able to service our customers.
Tim Phillips: And then, you know, maybe just a big picture question here. You know, we've had a couple companies talking about some potential spinoffs to unlock shareholder value. You know, when I look at your portfolio, there's certainly been some operational and valuation drag from some of the transactional segments on contract logistics. You know, when you think about the portfolio, are there any thoughts or conversations happening here around, you know, potential spins or divestitures? Or is it maybe something about the integration of the businesses or the cross-selling opportunities? Do you need to fix that?
Okay got it that's helpful. And then maybe just a big picture question here you know we've had a couple of companies talking about some potential spin offs to unlock shareholder value.
You know when I look at your portfolio are there certainly been some operational evaluation drive from somebody the transactional segments contract logistics you know when you think about the portfolio are there any thoughts or conversations happening here around you know potential students or divestitures or was there maybe something about the integration of the businesses or the cross selling opportunity to fix that.
Tim Phillips: I'm like, No, I think we're positioned well. I mean, I hate to look at some of our underperforming segments right now based on just the economic environment. But I will tell you this, we continue to evaluate anything that doesn't give us the proper margin profile. We've spoken over the last several quarters about where we think the long-term value is in the intermodal space. And we'll continue to optimize operations, consolidate, and look for better, more efficient ways to do things. We think when we come out of this slower period, we'll be ready to capitalize on and leverage additional phrases that funnel into the terminals that are already built. The brokerage environment has become much more difficult.
Unlikely.
No I think I think we're positioned well I mean, I I hate to look at some of our underperforming.
Segments right now based on just the economic environment, but I will tell you. This we continue to evaluate.
Anything that doesn't give us the proper margin profile, we've spoke over the last several quarters about where we think the long term value is in your in the intermodal space and will continue.
We'll continue to optimize operations consolidate look for better more efficient ways to do things, we think when we come out of this.
This slower period, we're gonna be ready to capitalize on and leverage additional phrases it funnels into the terminals that are already built.
The brokerage environment become much more difficult. It's it's a it's been a it's been a rough ride over the last part of 2023 and into 'twenty, four, but we're going to position that sector that segment of the business to be successful as possible. So there's no plans at this current point to do anything differently, but to give them the tools.
Tim Phillips: It's been a rough ride over the last part of 2023 and into 2024, but we're going to position that sector, that segment of the business, to be as successful as possible. So there's no plan at this current point to do anything differently but to give them the tools and continue to explore cross-sale opportunities, introducing other customers from other various segments into those portfolios. Got it. That's great. And then maybe just a final question here, you know, you gave us some color on the margin profile of the margin expectations for the first quarter, but you also talked about some of the leadership goals for the various businesses this year. You know, certainly there are a lot of moving parts with, you know, contract logistics and the new starts and the weather impact on trucking. And then, you know, the diversion impact on intermodal, as you talked about any thoughts on where we might be headed for the year, just in terms of the overall margin profile. And, you know, if you care to give any color on the individual businesses, I'm sure that would be helpful as well.
And continue to explore cross sell opportunities introducing other customers from other various segments into those portfolios.
Got it that's great and then maybe just a final question here.
You gave us some color on the margin profile of the margin expectations for the first quarter.
But you also talked about some of the leadership goals for the various businesses. This year certainly there are a lot of moving parts with contract logistics and the new starts and the weather impact on trucking.
And then you know the diversion that back on intermodal as you've talked about any any thoughts on where we might be headed for the year. Just in terms of the overall margin profile and if you care to give any color on the individual businesses I'm sure that would be helpful as well.
So for the full year I mean, I would just say that it's kind of TBD based on the.
Tim Phillips: So, for the full year, I would just say that it's kind of TBD based on the transportation environment either improving or staying the same, but I think we would feel comfortable with an annual guide of 1.8 to 1.9 billion with similar margins that we are expecting in Q1 in the 8 to 10 percent range. So, I mean, that's kind of the trajectory of where we think the business is going. I don't think it's stepping out too far of a limb to say that we could we're expecting that for the year.
The transportation environment, either improving or staying the same but I think we would feel comfortable with.
An annual guide of one eight to $1 9 billion with similar margins that we are expecting in Q1 on the 8% to 10% range. So I mean, that's that's kind of where the trajectory of where we think the business is going I don't think it's stepping out too far of a limb to say that we get we're expecting that for the year.
Tim Phillips: Okay, excellent. Well, thank you very much. I appreciate the time. Thank you. Again, if you have a question, please press star, then 1. Please stand by as we poll for questions.
Okay excellent well. Thank you very much appreciate the time thanks.
Thanks Bruce.
Again, if you have a question. Please press Star then one please.
Please standby as we poll for questions.
Showing no further questions. This concludes our question and answer session I would like to turn the conference back over to Tim Phillips for any closing remarks.
Tim Phillips: Showing no further questions, this concludes our question and answer session. I'd like to turn the conference back over to Tim Phillips for any closing remarks. Thank you, Gary. I would like to thank everyone for listening today. Universal continues to benefit from our diversified operating platforms, which helps balance the peaks and valleys associated with the overall freight market. Even with some of the headwinds we faced in 2023, Universal recorded its second best year ever of opt-income and EPS. Of course, all this is not possible without our talented group of hardworking associates.
Thank you Gary.
I would like to thank everyone for listening today Universal continues to benefit from our diversified operating platforms, which helps balance the peaks and valleys associated with the overall freight market.
Even with some of the headwinds we faced in 2023 Universal recorded its second best year ever of Op income and EPS.
Of course, all of this is not possible without our talented group of hard working associates.
Tim Phillips: I look forward to talking to everyone on the next earnings call slated for April 26, 2024. Thank you and have a great day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
I look forward to talking to everyone on the next earnings call slated for April 26 2024.
Thank you and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: Copyright 2021 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced, The Bulletproof Executive 2013, Copyright 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent, www. UniversalLogistics.com www.universallogistics.com
Yeah.
[music].