Universal Logistics has expanded its already fast-growing intermodal business with an acquisition of Southern Counties Express.
The $65 million purchase is of a company that has been heavily focused on the ports of Los Angeles and Long Beach for more than 25 years, according to a prepared statement released by Universal. The move expands Universal’s footprint in the port area. “Southern Counties offers full-service harbor drayage, transloading, warehousing and project cargo services,” the statement said. It added that according to data from the port of Los Angeles, Southern Counties was a “top-ranked carrier” as defined by the total number of “moves” in 2017.
Although the port activities were highlighted by Universal Logistics in its release, the Southern Counties Express website does also note that it has a truckload division. It also said on its website that Southern Counties has relationships with 175 owner-operators who are “under our umbrella.”
Southern Counties’ revenue in 2017 was $54.4 million, according to Universal, for an acquisition price of just under 1.2X revenue. Universal said it expects the acquisition to be immediately accretive to its earnings. The purchase was all cash.
In its statement, Universal CEO Jeff Rogers said adding Southern Counties “gives Universal a meaningful footprint in southern California and a solid platform for further expansion in this key transportation market.”
Southern Counties will operate as part of Universal’s intermodal division. In its recent second-quarter earnings release and conference call, Universal Logistics boasted about the performance of that group. Universal’s most recent acquisition before Southern Counties was of Fore, a $35 million purchase of a company that also ended up in Universal’s logistics business.
In the earnings report, Universal’s intermodal business saw a 41.9% increase in revenue in the second quarter compared to the second quarter of 2017, though it was boosted by Fore and by fuel surcharges. Other comparisons showed a strong performance for the group. In the quarter, Universal moved 98,468 intermodal loads, up 12% from the prior year, and its average operating revenue per load, excluding fuel surcharges, was up 27.4%.
During the conference call, Rogers was asked about acquisitions. He spoke of the Fore purchase, and indicated more was probably coming. “Obviously, we’re looking there (in intermodal) and we think we have opportunities,” he said. “We’re going to be very disciplined, but we want to look at businesses that either add a new area, whether a location that fits within our strategic footprint, where we’re not at now and we also want to do what we do.”
Universal had previously acquired Westport Axle in 2013 and LINC Logistic Company in 2012. Once Rogers became CEO in 2014, the company took a pause on its acquisition strategy, which has been a key element of the company’s growth strategy over the years. A spokesperson for the company tells FreightWaves there is a “fairly robust acquisition pipeline” going forward.
