Q1 2025 Universal Logistics Holdings Inc Earnings Call
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Speaker Change: Now my pleasure to introduce your host Mr. Tim Phillips, Chief Executive Officer.
Speaker Change: Mr Jude Paris, Chief Financial Officer.
Speaker Change: And Mr. Stevens Fitzpatrick, Vice President of Finance and Investor Relations. Thank you.
Mr. Phillips: Mr. Phillips you may begin.
Mr. Phillips: Thank you Andrew and good.
Speaker Change: Good morning, everyone and thank you for joining universal <unk> first quarter 2025 earnings call.
Mr. Phillips: As we kick off the new year, we do so with an understanding of the challenges facing the broader transportation and logistics landscape.
Speaker Change: The overall freight environment remains sluggish.
Speaker Change: In our largest vertical automotive saw a slowdown in January in January.
Speaker Change: But improved as the quarter progressed.
Speaker Change: While the results of this quarter were below our historical benchmarks.
Speaker Change: We remain confident in the resilience of our business model and our long term strategic direction of the company.
Speaker Change: Before I begin I want to recognize the incredible commitment of more than 10000 employees and contractors.
Speaker Change: Their hard work in the face of poor weather and market volatility continues to be the backbone of our operations and a key reason why we are well positioned for future growth.
Speaker Change: Let's get into the results.
Speaker Change: <unk> recorded $383 4 million in total operating revenue for the first quarter of 2025.
Speaker Change: Net income was <unk> 6 billion or 23 per share.
Speaker Change: Operating margin for the quarter came in at four 1%.
Speaker Change: While this represents a year over year decline.
Speaker Change: It is important to note that the year ago quarter included are now completed development project in Tennessee.
Speaker Change: Adjusting for that our core performance remained stable with encouraging progress in several key areas.
Speaker Change: Our contract logistics segment continues to be a critical part of our business contributing.
Speaker Change: Contributing $255 9 million in revenue and delivering a solid nine 3% operating margin.
Speaker Change: Despite the absence of last year's $95 3 million specialty project revenue.
Speaker Change: We are on track to book over $1 1 billion in contract logistics revenue in 2025.
Speaker Change: Additionally, we continued to integrate and optimize our perfect acquisition.
Speaker Change: Which contributed $56 4 million in revenue this quarter.
Speaker Change: We now operate 87 value added program, including 20 rail terminal operations.
Speaker Change: <unk> increase from the 70 room programs at the same time last year.
Speaker Change: As mentioned auto production influenced volumes early in the quarter, but activity picked up in February and then surged through March.
Speaker Change: We remain encouraged by the long term opportunities in this segment, particularly as we leverage our expanded footprint and deepen relationships with legacy and new customers.
Speaker Change: We have three key launches that will begin in the second quarter. These launches will increase our contract logistics annual revenue by $50 million per year at historic margins.
Speaker Change: Contract logistics continues to drive Universal Port with massive customer interest in our customized solutions led by our World Class service.
Speaker Change: Turning to trucking revenues came in at $55 6 million down 22% from the prior year.
Speaker Change: Largely due to a 31, 3% drop in volumes.
Speaker Change: However revenue per load, excluding fuel surcharges increased by more than 24%.
Speaker Change: A sign that our strategy of emphasizing specialized high yield freight is gaining traction.
Speaker Change: Operating income in the trucking was $2 2 million with a three 9% margin.
Speaker Change: We continue to see strong demand in our specialized heavy haul wind operation, which.
Speaker Change: Which remains strategic differentiator and a stabilizing force for the segment.
Speaker Change: Looking ahead, we expect this business to be a key contributor in 2025, especially as renewable energy infrastructure projects continue to move forward.
Speaker Change: Our intermodal segment remains a work in progress.
Speaker Change: Revenues decreased to $70 $7 million, and we reported an operating loss of $10 7 million.
Speaker Change: The segment was negatively impacted by both a three 4% drop in volumes.
Speaker Change: An eight 7% decline in rate per load excluding fuel.
Speaker Change: Additionally, the quarter included a $1 million in charges related to employment related matter.
Speaker Change: While these results are disappointing we believe we've hit bottom in this segment.
Speaker Change: Our new intermodal sales team is gaining traction and we have seen stable freight volumes, we remain committed to transforming this business into a leaner more efficient contributor to the universal portfolio.
Speaker Change: Across the board, we are taking strategic actions to improve underperforming operations, while remaining disciplined in our growth our sales pipeline remains strong and we continue to pursue new opportunities in areas, where we can create long term value and achieve sustainable margins.
Speaker Change: In closing.
Speaker Change: While Q1 was clearly a challenging quarter, we are not standing still.
We are focused.
Speaker Change: We are making necessary adjustments.
Speaker Change: And we believe the second half of 2025 will look markedly different.
Speaker Change: Our team is committed to ever delivering for our customers our employees and our shareholders.
Speaker Change: Finally.
Speaker Change: We are closely monitoring the impact of tariffs on our business.
Speaker Change: We're in constant communication with our customers, ensuring we are ready to adapt and implement any changes that require to keep the assembly lines that we support producing.
Speaker Change: Thus far we will see a number of benefits to our contract logistics segment as to assembly plants that we service will increase production.
Speaker Change: Although there is plenty of uncertainty with the potential outcome on tariffs we are.
Speaker Change: We're also looking for opportunities in this fluid environment.
Speaker Change: We are actively engaging the customers regarding our manufacturing capabilities in Louisville, Kentucky.
Speaker Change: Operating storage solutions at our intermodal depots that are within close proximity to several ports and inland rail.
Speaker Change: As well as operating excess warehouse and assembly capacity to both our existing and prospective customers in strategic locations throughout our network.
Speaker Change: We are consulting with our customers to assist with their contingency planning efforts to mitigate the effects of tariffs as well as assist in any near or re shoring planning they're engaged in.
Speaker Change: We'll have additional updates on our Q2 call.
Speaker Change: Once again I want to thank all of our employees for their continued hard work and dedication.
Speaker Change: And to customers and to our customers. Thank you for your continued trust and Universal.
Speaker Change: Now I will turn the call over to Julie for more color on our financials and expectations for the remainder of the year. Just thanks, Tim Good morning, everyone yesterday, Universal Logistics Holdings reported consolidated net income of 6 million or <unk> 23 per share on total operating revenues of $382 4 million in the first quarter of 2020.
Speaker Change: Five this compares to net income of $52 5 million or $1 99 per share on total operating revenues of $491 9 million. During the same period last year consolidated income from operations was $15 7 million for the quarter compared to $75 1 million one year earlier.
Speaker Change: EBITDA decreased $45 2 million to $51 7 million, which compares to $96 9 million. During the same period last year, our operating margin and EBITDA margin for the first quarter of 2025 or four 1% and 13, 5% of total operating revenues. These.
Speaker Change: Metrics compared to 15, 3% and 19, 7% respectively in the first quarter of 2024.
Speaker Change: Looking at our segment performance for the first quarter of 2025, and our contract logistics segment, which includes our value add and dedicated transportation businesses income from operations decreased $57 6 million to $23 9 million on $255 9 million of total operating revenues. This compares to operating income.
Speaker Change: Of $81 5 million on $313 5 million of total operating revenue in the first quarter of 2024.
Speaker Change: For comparison purposes in the first quarter of 2025 included $56 4 million of revenue attributable to our recent acquisition of <unk>, while the first quarter of 2024 included $95 3 million of revenue attributable to our specialty development program, which as mentioned was completed in 2020.
Speaker Change: For operating.
Speaker Change: Operating margins for the quarter were nine 3% of total operating revenues compared to 26% one year earlier overall the decline in operating margin for our contract logistics segment was attributable to sub seasonal start to the year and auto production volumes. The completion of the previously mentioned specialty development program and the.
Speaker Change: Impact of both the intangibles and accelerated depreciation on equipment related to the <unk> acquisition.
Speaker Change: Onto our intermodal segment operating revenues decreased $7 7 million to $70 7 million compared to $78 4 million in the same period last year and income from operations decreased $2 4 million to an operating loss of $10 $7 million. This compares to an operating loss of $8 3 million in the first quarter of.
Speaker Change: <unk> 2024 operating ratios for the quarter were 115, 1% versus 110, 6% last year.
Speaker Change: In our trucking segment operating revenues for the quarter decreased $14 1 million to $55 6 million compared to $69 7 million in the same quarter last year and income from operations decreased $1 5 million to $2 2 million. This compares to $3 7 million in the first quarter of 2020 for operating margins.
Speaker Change: For the quarter were three 9% versus five 3% last year.
Speaker Change: On our balance sheet, we held cash and cash equivalents totaling $26 million and $12 million of marketable securities.
Speaker Change: Outstanding.
Speaker Change: Interest bearing debt net of $3 3 million of debt issuance cost totaled $736 7 million at the end of the period and excluding lease liabilities related to ASC 842, our net interest bearing debt to reported TTM EBITDA was two six times.
Speaker Change: Capital expenditures for the quarter were $52 6 million.
Speaker Change: Excluding any impact of tariffs for the second quarter of 2025, we are expecting top line revenues between 390, and $410 million and operating margins between 5% and 7% and EBIT margins in the 14% to 16% range.
Speaker Change: For the full year, we are expecting capital expenditures for equipment to be in the $100 million to $125 million range and real estate between 55% and $65 million.
Speaker Change: Interest rate is expected to come in between 48% and $51 million.
Speaker Change: Finally, Wednesday, our board of directors declared Universal's 10, five cents per share regular quarterly dividend. This quarter's dividend is payable to shareholders of record at the close of business on June 2nd and is expected to be paid on July one 2025.
Speaker Change: With that Andrew we are ready to take some questions.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Thanks.
Speaker Change: Q.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
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Speaker Change: One moment. Please for your first question.
Bruce Chan: Your first question is from Bruce Chan from Stifel. Please go ahead.
Speaker Change: Hi, good morning, everyone and Andy thoughts on for Bruce.
Bruce Chan: Andrew.
Speaker Change: Hey, guys I, just wanted to kind of get a sense of how auto Oems with trending month to date and how public conversations with auto Oems are going forward expectations for the rest of the year I mean, I know you guys.
Speaker Change: It sounds like you're progressing as the quarter went on and constant improvement in the margin and we've all seen the Saar data for March.
Speaker Change: It seemed like there was a pull forward there so just kind of trying to understand how.
Speaker Change: Volumes and expectations are trending since then and how these mid teens for the rest of the year. Thank you.
Speaker Change: Yes for sure Andrew I'll talk about the progression in the quarter and then Tim will get to the outlook. So.
Speaker Change: As we kind of mentioned in the comments, we really had a slow start to the year and although we don't normally don't provide intra quarter.
Speaker Change: Analysis, I think it's worth mentioning at this quarter, just because of how dramatic it was in January of this year Universal experienced its first loss ever in January. So we went into February five cents in the hole, losing <unk> <unk> of EPS per share than the quarter slowly got better.
Speaker Change: We went from negative five cents a share in January to positive nine a share in February and then <unk> 19, a share in March so the quarter really started out low and the business really rebounded well. So for example, our cross dock tonnage.
Speaker Change: In February was up 30% from January and then March is cross dock tonnage was up 64% from January levels Auto production was up 29% in February from January and then up 67, 1% in March from.
Speaker Change: January and then lift at our <unk> business were up 24, 2% from February then 43, 5% from January and we also saw some nice trends as well in our intermodal business, where our intermodal volumes were up 13% in February from January's numbers, and then 53.
Speaker Change: From January are from March to January So there was a lot of really great improvement as the quarter progressed and.
Speaker Change: If we just would've had an environment in January that was similar to February the <unk>.
Speaker Change: <unk> would have looked a lot different we would have definitely been within our guidance range of around $400 million of revenue.
Speaker Change: <unk> of around 41, and well within our <unk> 14 to <unk>.
Speaker Change: 16% guide on EBITDA, so a real rough to the start of the year, but the numbers that I just showed really.
Speaker Change: The rebound in auto and of course, then how our earnings were really driven by that additional volume coming into our facilities, which show the operating leverage that we have in the business. If you want to go through the outlet, Tim Yes, and I would that extend from for March on with Judith speaking about we've had some really good collaborative.
Speaker Change: Conversations with various Oems that we serve while there is some uncertainty on sourcing of parts Theres been no alarms that had been founded on direction. In fact, we feel that our footprint within the U S gives us a definite advantage on servicing some of the high production plants that the autos have.
Speaker Change: So we feel good and I think we've mentioned that in our prepared remarks that at least two of the facilities. We service in the United States Theyre looking at ramped up production so line speed.
Speaker Change: Some facilities looking at extending from five to six days and then.
Speaker Change: Things that we see over the over that quarter coming up and onward, nothing that alarms us from a production standpoint. So I think I also mentioned in the prepared remarks, we're ready willing and able to provide other logistics solutions within the United States as well as we're in.
Speaker Change: In close proximity to most of these plants, so we feel comfortable.
Their strategies are and how they realign their supply chain will be there to help them consult and hopefully optimize their network <unk>.
Speaker Change: One more final comment.
Speaker Change: Dovetailing off of Ken's comments, Andrew is that the automotive.
Speaker Change: Companies have really done a nice job of unwinding those large inventories that we saw in the middle of last year. So towards the end of Q4 some of the industry rags. We're printing there was about 3% to $3 1 million op units on the ground in late Q4 early Q1, while those numbers are now down to $2 six.
Speaker Change: So basically they have unwound 500000 units net in Q1, which is a reduction of like 16%. If you also look at the new days supply of inventory in June of last year that number was averaging 116 days that number is now 70 days. So once again a reduction of 40%.
Speaker Change: If tariffs don't.
Speaker Change: Kill the entire industry, we're really set up in the back half for some decent production numbers, which will really drive our results.
Speaker Change: That's really good to hear and then corroborate some of the other commentary we've heard where shippers at this point seemed to be a little bit more afraid of rising costs then.
Speaker Change: The potential for demand disruption at this point so that's good to hear on that.
Speaker Change: That front.
Speaker Change: Thinking about inventories maybe more on a more broader sense in the.
Speaker Change: Some of the other verticals that you serve are you seeing kind of wait and see approach taking hold here I mean that kind of seems to be the consensus we see forming just until we get a little bit more clarity on the on the tariff policy. What are you guys seeing there.
Speaker Change: I would agree with that we're seeing in customer communication, a wait and see approach.
Speaker Change: Customers have potentially more can be more affected by the tariffs than others.
Speaker Change: And Theyre strategizing as they went through the quarter and go into this quarter, what they do where they source from once again as we get in some of our other segments other than just the four walls of value added we're pretty well positioned in port and rail cities that we can offer storage, we can offer metering out of our various yards and location.
Speaker Change: So if this if it is determined that theyre going to pull some stuff forward, we're able to help with storage solutions and metering solutions, but at this point we have had.
Speaker Change: Nobody make definitive this is how we see quarter 234, looking so we're kind of we're kind of.
Speaker Change: Aligning with you on what Youre hearing from the rest.
Speaker Change: Okay and on the on those facilities Youre speaking up where you can do some metering and some warehousing around the ports can you remind us of the kind.
Speaker Change: The geographical dispersion of those or are you guys more west or east coast space, whereas in the dispersion there.
Speaker Change: With nationally so when it comes to port alignment, we're in La long Beach, the inland Empire, Oakland inland and stocked in Seattle, and Portland, and then we've got the ports.
Speaker Change: On the East Coast, all the way from Jersey, all the way down to Jacksonville, and then if you look at the infrastructure of the rail network were placed in all major rail network in cities such as Chicago.
Speaker Change: Dallas, We do have a presence I mentioned on ports, but we also service supported Houston, So we're pretty well connected I also.
Speaker Change: Feel really good about our potential in Atlanta, I don't think we will miss anything on the intermodal front I think we're positioned well and in our warehouses.
Speaker Change: Our elos these around the country are positioned close to manufacturing. So if you can think of major manufacturing around the country. There's a good chance we have one of our facilities there.
Speaker Change: And as a follow up what what kind of scenarios are you guys contemplating for that into <unk>.
Inputs fall off kind of abruptly here beginning it seems like first week of May.
Speaker Change: What are the kind of scenario analysis, you guys are going to do that.
Speaker Change: Yes, I mean, we're kind of just kind of dovetailing off of some of the comments that were brought out by the National retail Federation with the report that came out a couple of days ago or what maybe maybe late last week. They were kind of looking for about a 15% reduction in import that should start hitting.
Speaker Change: Mid to late May So, we're just kind of looking at that our intermodal business and kind of dovetailing.
Speaker Change: Off of what's been out there but.
Speaker Change: Other than that.
Speaker Change: There's not a whole lot to report.
Speaker Change: Okay understood and I guess I've got one last one here on the flatbed market.
Speaker Change: We've seen some broad signs of strengthening its been relatively stronger than the rest of us testing modes year to date, but we have seen a little bit of a rollover. It seems like that there was some maybe some pull forward in certain input materials and raw materials in certain places of the country I just kind of wanted to see how the the broader tightening of the flatbed market has impacted particularly.
Speaker Change: The heavy haul business or any of you on flatbed offerings. Thank you.
Speaker Change: Sin.
Speaker Change: Episodic tightening in places that it does help the rates or is this really just driven by a continued.
Speaker Change: Our expansion into the ABL business. Thank you.
Speaker Change: Yes, I would like on the on the heavy haul wind business. We have we have seen an expansion of that that really influences our open deck division if.
Speaker Change: If you want to consider the differential between heavy haul specialized which we break off into a separate unit are open deck division has been I would say pretty consistent we've seen a little bit of lift as the quarter progressed, but nothing that I would call.
Speaker Change: Outstanding that we could sit here on this call and tell you about so I think things are pretty status quo pricings remain pricings.
Speaker Change: Pricing is really relatively stable, but theres been no great upward lift at this point and flatbed transportation.
Speaker Change: Okay. Thank you also look at the time.
Speaker Change: Thank you. Thank you.
Speaker Change: Ladies and gentlemen, as a reminder, should you have any questions. Please press the star key followed by the number one.
Speaker Change: Yeah.
There are no further questions at this time. Please proceed with closing remarks.
Andrew: Thank you Andrew.
Speaker Change: Universal will remain disciplined with our cost control initiatives, while focusing our sales efforts on new and existing customers.
Speaker Change: Shape their supply chain by providing a customer centric approach to accuracy velocity and visibility.
Speaker Change: While we realize the transportation and logistics landscape remains uncertain, we remain focused on the opportunities this will present.
Speaker Change: Thank you for joining today's call and we look forward to continued conversation next quarter.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today.
Speaker Change: Thank you for participating and ask that you. Please disconnect your lines.
Speaker Change: Yes.