Universal Logistics Holdings CEO Tim Phillips described the company’s third-quarter earnings performance as a “tale of two takes.”
The Warren, Michigan-based company’s total revenue in the quarter was $421.3 million, a 17% year-over-year (y/y) decline, but beat Wall Street estimates of $420 million.
The company posted earnings per share of 88 cents, missing analysts’ estimates of $1. Third-quarter EPS decreased 52% y/y compared to the same period in 2022.
“The third quarter was a tale of two takes: Our contract logistics group navigated late-quarter market disruption with outstanding performance, while headwinds continue to hamper our intermodal and brokerage segments,” Phillips said during the company’s earnings call on Friday following the release of the results after the market closed on Thursday. “Our truckload segment outperformed expectations with a strong showing from a specialized services group.”
Universal Logistics (NASDAQ: ULH) provides truckload, brokerage, intermodal and dedicated services in the U.S., Mexico, Canada and Colombia.
In the trucking segment, third-quarter revenues decreased 2.5% to $97.1 million, compared to $99.6 million for the same period last year. Universal’s trucking segment tallied 43,996 loads, compared to 50,614 in the same year-ago period.
While truckload volume was down in the quarter, the average operating revenue per load, excluding fuel surcharges, increased 13% y/y to $2,033. The number of tractors during the third quarter decreased about 2% y/y to 879, while the average length of haul fell 1.5% y/y to 388 miles.
“Van and flatbed headwinds continued in the third quarter for our trucking segment,” Phillips said. “While core flatbed and van volumes remain a challenge, our variable cost structure model provided consistent returns.”
Universal’s third-quarter intermodal revenue decreased 44% y/y to $86.6 million, affected by lower import volumes on the West Coast, Phillips said.
“Intermodal in California operations continue to be a drag on the segment’s overall financial result,” Phillips said. “While we are confident in our continued effort to right-size and optimize the intermodal fleet, freight volumes and pricing will play a part in that equation. Losses in Southern California affected our overall EPS by 19 cents per share.”
Universal Logistics’ third-quarter revenue in its company-managed brokerage segment decreased 30.8% to $28.1 million, compared to $40.6 million for the same year-ago period.
“Company-managed brokerage dropped 30.8% … amid a sluggish freight market influenced by inflation and consumer spending that continued to drive down pricing,” Phillips said.
Phillips said the company is optimistic about freight-hauling opportunities improving in the Mexico cross-border automotive space, as well as loads in the Class 8 truck manufacturing market.
Universal Logistics is working with a customer that launched manufacturing operations in Mexico in October.
“Universal remains focused on the opportunities that Mexico presents as nearshoring trends have now elevated Mexico as the United States’ largest import trading partner,” Phillips said. “We are extremely excited about adding to our density in central Mexico. We were successful in obtaining new trucks and trailers to support the customer and expect this to be an entry into additional business in the region. The program will be over a five-week period and be supported by 40 drivers and 60 trailers. This new business is expected to generate approximately $6 million in annual revenue.”
| Universal Logistics Holdings | Q3/23 | Q3/22 | Y/Y % Change |
| Operating revenue | $421.3M | $505.7M | (16.7%) |
| Operating income | $36.8M | $48.5 | (47.3%) |
| Operating margin % | 8.7% | 13.8% | (37%) |
| Trucking | $97.1M | $99.6M | (2.5%) |
| Intermodal | $86.6M | $154.4M | (43.9%) |
| Contract logistics | $208.1M | $209.5M | (0.7%) |
| Company-managed brokerage | $28.1M | $40.6M | (30.8%) |
| Adjusted earnings per share | $0.88 | $1.84 | (52.2%) |
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