A softening freight market took a toll on Universal Logistics Holdings Inc. (NASDAQ: ULH), an asset-light provider of customized transportation and logistics solutions.
The company reported second quarter 2019 net income of $20 million, or $0.70 per share, a 12.9 percent increase over the same period last year. Universal also reported second quarter 2019 operating revenues of $383.2 million, a 4.7 percent increase over the same period last year.
But the second quarter earnings also reflected losses, specifically in the company’s truckload and brokerage divisions.
“We experienced some softness in trucking rates and volumes during the quarter, which was consistent across our industry, but overall we finished up reporting our best second quarter revenue on record and our highest earnings per share ever,” said Chief Executive Officer Jeff Rogers.
Universal provides a range of transportation and logistics services, including dry van and flatbed truckload, intermodal and freight brokerage, plus dedicated contract carriage and warehousing and distribution.
The company took a hit on truckload services, with revenues clocking in at $64.8 million, compared to $82.7 million for the same period last year. That reflects an 18 percent decrease in the number of loads hauled and a 4 percent decrease in average operating revenue per load.
“The second quarter never really picked up like you would expect,” Rogers said during an earnings call with investors on July 26. “From a volume perspective, June never showed the pop you would normally get.” Although spot rates were down during the second quarter, they appear to have “bottomed out,” he said.
Rogers said he anticipates downward pressure on truckload rates by around 5 to 6 percent for the remainder of the year. Responding to an investor question, he said the soft market was due primarily to broader socioeconomic factors, not overcapacity. “Geopolitical noise and uncertainty, that is what makes people hesitant.”
Universal’s brokerage division also suffered, with revenues decreasing $3.1 million, or 3.4 percent, to $89.4 million compared to $92.5 million one year earlier. The decrease is primarily due to a 10.5 percent decline in the average operating revenue per load, which was partially offset by an 8.7 percent increase in the number of brokerage loads moved.
Intermodal services were a bright spot, increasing $39.0 million to $93.9 million in the second quarter of 2019, up from $54.9 million during the same period last year. The increase was attributed to an uptick in loads transported, a boost in fuel surcharges and revenues generated from acquisitions.
During the investor call, Rogers said intermodal rates shouldn’t see much of a decline during the second half of the year compared to truckload. Most of the intermodal rate pressure is coming from steamship lines facing a new regulatory environment. A sulfur cap for the global ocean shipping industry is expected to increase the demand for distillate fuel, raising the price of diesel for truckers.
Dedicated and value-added services stayed about par with the same period last year, bringing in around $99 million and $35 million, respectively.
Universal updated its full-year revenue expectations for 2019 from $1.6 billion to $1.7 billion to $1.5 billion to $1.6 billion.
Daniel melius
Dont you think thats from losing drivers and agents .its a shame for what happened here in the last year and a half