UNITED STATES
證券交易委員會
WASHINGTON, D.C. 20549
表格
(標記一個)
根據1934年證券交易法第13或15(d)條款的季度報告。 |
For the quarterly period ended
或
根據1934年證券交易法第13或15(d)條款的過渡報告 |
到 天從發票日期計算，被視為商業合理。 .
Commission File Number:
（根據其組織憲章規定的正式名稱）
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(依據所在地或其他管轄區) 的註冊地或組織地點) |
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(國稅局雇主識別號碼) 識別號碼) |
(Address, including Zip Code of Principal Executive Offices)
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
請打勾選項以表示以下事項：（1）登記人在過去12個月（或要求登記人提交報告的較短期限）內已提交證券交易法1934年第13或15(d)條款要求提交的所有報告；（2）在過去90天內，登記人一直須遵守上述提交要求。
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
大型加速歸檔人 |
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☐ |
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☒ |
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非加速歸檔人 |
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☐ |
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小型報告公司 |
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新興成長型企業 |
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如果一家新興成長公司，請勾選此選項表示申報人是否選擇不使用交易法第13(a)條所提供的遵守任何新制定或修訂的財務會計準則的延長過渡期。☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the registrant’s common stock, no par value, outstanding as of November 4, 2024, was
財務報表第一部分
ITEM 1: FINANCIAL STATEMENTS
環球物流控股有限公司。
Unaudited Consolidated Balance Sheets
(In thousands, except share data)
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九月二十八日, |
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12月31日， |
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資產 |
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流動資產: |
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現金及現金等價物 |
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$ |
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$ |
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有價證券 |
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應收賬款 - 減除$的信用損失準備 |
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合同資產 |
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其他應收款項 |
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預付費用和其他 |
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應收款項 |
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全部流動資產 |
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資產和設備-減除累計折舊後的淨值為$ |
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經營租賃權使用資產 |
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商譽 |
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無形資產-減除累計攤銷$ |
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合同資產，扣除當前部分 |
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推延所得稅 |
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其他資產 |
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資產總額 |
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$ |
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$ |
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負債及股東權益 |
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流動負債： |
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應付賬款 |
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$ |
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$ |
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長期債務的當期償還 |
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營運租賃負債的流動部分 |
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應計費用及其他流動負債 |
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保險和索賠 |
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由於 |
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應納所得稅款 |
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流動負債合計 |
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長期負債： |
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長期負債，除了當期部分淨額 |
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扣除當期償還後之經營租賃負債淨額 |
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推延所得稅 |
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其他長期負債 |
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長期負債總額 |
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股東權益: |
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普通股, |
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資本剩餘 |
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庫藏股股數，成本法； |
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( |
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( |
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保留收益 |
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其他綜合收益（損失）： |
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利率互換，扣除$利得稅後淨額 |
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外匯轉換調整 |
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( |
) |
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( |
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股東權益總額 |
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負債總額及股東權益 |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
2
UNIVERSAL LOGISTICS HOLDINGS, INC.
Unaudited Consolidated Statements of Income
(In thousands, except per share data)
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Thirteen Weeks Ended |
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Thirty-nine Weeks Ended |
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September 28, |
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September 30, |
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September 28, |
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September 30, |
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Operating revenues: |
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Truckload services |
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$ |
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$ |
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$ |
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$ |
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Brokerage services |
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Intermodal services |
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Dedicated services |
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Value-added services |
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Total operating revenues |
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Operating expenses: |
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Purchased transportation and equipment rent |
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Direct personnel and related benefits |
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Operating supplies and expenses |
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Commission expense |
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Occupancy expense |
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General and administrative |
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Insurance and claims |
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Depreciation and amortization |
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Impairment expense |
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Total operating expenses |
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Income from operations |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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( |
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Other non-operating income |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Earnings per common share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average number of common shares outstanding: |
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Basic |
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Diluted |
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Dividends declared per common share |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
3
UNIVERSAL LOGISTICS HOLDINGS, INC.
Unaudited Consolidated Statements of Comprehensive Income
(In thousands)
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Thirteen Weeks Ended |
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Thirty-nine Weeks Ended |
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September 28, |
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September 30, |
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September 28, |
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September 30, |
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Net Income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Unrealized changes in fair value of interest rate swaps, |
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( |
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( |
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Foreign currency translation adjustments |
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( |
) |
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( |
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( |
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Total other comprehensive income (loss) |
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( |
) |
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( |
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( |
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Total comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
4
UNIVERSAL LOGISTICS HOLDINGS, INC.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
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Thirty-nine Weeks Ended |
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September 28, |
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September 30, |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Noncash lease expense |
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Impairment expense |
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Gain on marketable equity securities |
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( |
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( |
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Loss (gain) on disposal of property and equipment |
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( |
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Amortization of debt issuance costs |
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Stock-based compensation |
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Provision for credit losses |
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Deferred income taxes |
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Change in assets and liabilities: |
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Trade and other accounts receivable |
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( |
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Contract assets, prepaid expenses and other assets |
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( |
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( |
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Principal reduction in operating lease liabilities |
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( |
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( |
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Accounts payable, accrued expenses, income taxes payable, |
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Due to/from affiliates, net |
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( |
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( |
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Other long-term liabilities |
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( |
) |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Capital expenditures |
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( |
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( |
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Proceeds from the sale of property and equipment |
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Proceeds from the sale of marketable securities |
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Acquisition of business |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Proceeds from borrowing - revolving debt |
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Repayments of debt - revolving debt |
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( |
) |
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( |
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Proceeds from borrowing - term debt |
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Repayments of debt - term debt |
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( |
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( |
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Dividends paid |
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( |
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( |
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Capitalized financing costs |
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( |
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Purchases of treasury stock |
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( |
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( |
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Net cash provided by (used in) financing activities |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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( |
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Net decrease in cash |
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( |
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( |
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Cash and cash equivalents – beginning of period |
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Cash and cash equivalents – end of period |
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$ |
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$ |
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Supplemental cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
5
UNIVERSAL LOGISTICS HOLDINGS, INC.
Unaudited Consolidated Statements of Shareholders’ Equity
(In thousands, except per share data)
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Common |
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Paid-in |
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Treasury |
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Retained |
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Accumulated |
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Total |
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Balances – December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Dividends ($ |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
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Stock based compensation |
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— |
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— |
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— |
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Balances – April 1, 2023 |
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( |
) |
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( |
) |
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Net income |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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Dividends ($ |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
Stock based compensation |
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|
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— |
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— |
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— |
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|||
Balances - July 1, 2023 |
|
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( |
) |
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( |
) |
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||||
Net income |
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— |
|
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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Purchases of treasury stock |
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— |
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|
|
— |
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( |
) |
|
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— |
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|
— |
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( |
) |
Dividends ($ |
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|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
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|
( |
) |
Stock based compensation |
|
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|
|
|
|
— |
|
|
|
— |
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|
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— |
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|||
Balances – September 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
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||||||
Balances – December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
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|
||
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
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|
|
|
|
||
Dividends ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock based compensation |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Retirement of treasury stock |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
Balances – March 30, 2024 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Dividends ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock based compensation |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Purchases of treasury stock |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balances - June 29, 2024 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Dividends ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock based compensation |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balances – September 28, 2024 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
See accompanying notes to consolidated financial statements.
6
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements of Universal Logistics Holdings, Inc. and its wholly-owned subsidiaries (“Universal”) have been prepared by the Company’s management. In these notes, the terms “us,” “we,” “our,” or the “Company” refer to Universal and its consolidated subsidiaries. In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary to present fairly the information required to be set forth therein. All intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, should be read in conjunction with the consolidated financial statements as of December 31, 2023 and 2022 and for each of the years in the three-year period ended December 31, 2023 included in the Company’s Form 10-K filed with the Securities and Exchange Commission. The preparation of the consolidated financial statements requires the use of management’s estimates. Actual results could differ from those estimates.
Our fiscal year ends on December 31 and consists of four quarters, each with thirteen weeks.
The Company made certain immaterial reclassifications to items in its prior financial statements so that their presentation is consistent with the format in the financial statements for the period ended September 28, 2024. These reclassifications, however, had no effect on reported consolidated net income, comprehensive income, earnings per common share, cash flows, total assets or shareholders’ equity as previously reported.
In August 2024, the Company closed its company-managed brokerage operations in Nashville, TN. In connection with the closure, the Company recorded pre-tax losses of approximately $
During the third quarter of 2024, the Company identified certain triggering events related to a component of its former company-managed brokerage reporting segment. In accordance with FASB Accounting Standards Codification (“ASC”) 350 Intangibles—Goodwill and Other and ASC 360 Property, Plant, and Equipment, the Company evaluated certain indefinite and long lived tangible and intangible assets for impairment, and recorded an additional goodwill impairment charge of $
In June 2024, the Company revised the estimated useful life and salvage values of certain equipment. The change resulted in additional depreciation expense of $
In January 2024, the Company’s value-added business began performing specialty project development services for certain customers. Contract assets represent amounts for which the Company has recognized revenue in excess of billings pursuant to the revenue recognition guidance. As of September 28, 2024 and December 31, 2023, contract assets associated with certain contracts with customers recognized over time are included as contract assets in the Company’s consolidated balance sheets. Contract assets associated with other contracts with customers were reclassified from prepaid expenses and other on the consolidated balance sheets to contract assets.
During the first quarter of 2024, the Company identified certain triggering events related to a component of the intermodal reporting segment. In accordance with ASC 350 Intangibles—Goodwill and Other and ASC 360 Property, Plant, and Equipment, the Company evaluated certain indefinite and long lived tangible and intangible assets for impairment. The results of those procedures concluded that no impairments were present. After performing the evaluation, it was determined that a change in the estimated useful lives of certain definite lived intangible assets was appropriate and was adjusted during the period. The change resulted in additional amortization expense of $
Current Economic Conditions
The Company makes estimates and assumptions that affect reported amounts and disclosures included in its financial statements and accompanying notes and assesses certain accounting matters that require consideration of forecasted financial information. The Company's assumptions about future conditions important to these estimates and assumptions are subject to uncertainty, including the negative impact inflationary pressures can have on our operating costs. Prolonged periods of inflation could cause interest rates, equipment, maintenance, labor and other operating costs to continue to increase.
7
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). The ASU expands disclosures related to a public entity's reportable segment and requires more enhanced information about significant segment expenses, including in interim periods. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, using a retrospective approach. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU modifies income tax disclosures by requiring greater disaggregation of information in the rate reconciliations and disclosure of income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 31, 2024, using a prospective approach. Early adoption and retrospective application are permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures.
The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers. The Company broadly groups its services into the following categories: truckload services, brokerage services, intermodal services, dedicated services and value-added services. We disaggregate these categories and report our service lines separately on the Consolidated Statements of Income.
Truckload services include dry van, flatbed, heavy-haul and refrigerated operations. We transport a wide variety of general commodities, including automotive parts, machinery, building materials, paper, food, consumer goods, furniture, steel and other metals on behalf of customers in various industries.
To complement our available capacity, we also provide customers with freight brokerage services by utilizing third-party transportation providers to move freight.
Intermodal services include rail-truck, steamship-truck and support services. Our intermodal support services are primarily short- to medium-distance delivery of rail and steamship containers between the railhead or port and the customer.
Dedicated services are primarily provided in support of automotive and retail customers using van equipment. Our dedicated services are primarily short-run or round-trip moves within a defined geographic area.
Transportation services are short-term in nature; agreements governing their provision generally have a term of
We determine revenue in-transit using the input method, under which revenue is recognized based on the duration of time that has lapsed from the departure date (start of transportation services) to the arrival date (completion of transportation services). Measurement of revenue in-transit requires the application of significant judgment. We calculate the estimated percentage of an order’s transit time that is complete at period end, and we apply that percentage of completion to the order’s estimated revenue.
Value-added services, which are typically dedicated to individual customer requirements, include material handling, consolidation, sequencing, sub-assembly, cross-dock services, kitting, repacking, warehousing, returnable container management and specialty project development. Value-added revenues are substantially driven by the level of demand for outsourced logistics services and specialty project needs. Major factors that affect value-added service revenue include changes in manufacturing supply chain requirements and production levels in specific industries, particularly the North American automotive and Class 8 heavy-truck industries.
Revenue is recognized as control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to receive in exchange for its services. We have elected to use the “right to invoice” practical expedient to recognize revenue, reflecting that a customer obtains the benefit associated with value-added services as they are provided. The contracts in our value-added services businesses are negotiated agreements, which contain both fixed and variable components. The variability of revenues is driven by volumes and transactions, which are known as of an invoice date. Value-added service contracts typically have terms that extend beyond one year, and they do not include financing components.
8
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
Beginning in 2024, value-added services also includes specialty project development services for customers. The specialty project development service is generally accounted for as a single unit of account (i.e., as a single performance obligation). Revenue is recognized over time as the Company continuously transfers control of the project to the customer. Because we transfer control of the project over time, we recognize revenue to the extent of our progress towards completion of our performance obligations. We generally use the cost-to-cost method for these contracts, which measures progress towards completion for each performance obligation based on the ratio of costs incurred to date to the total estimated costs at completion for the applicable performance obligation. Incurred cost represents work performed, which corresponds with and thereby best represents the transfer of control to the customer. Revenue, including estimated fees or profits, is recorded proportionately as costs are incurred. Cost of operations consists of labor, materials, subcontractor costs, and other direct and indirect costs, and we include them in operating supplies and expenses on the consolidated statements of income. Due to the nature of the work we are required to perform under these types of contracts, estimating total revenue and cost at completion is complex, subject to many variables and requires significant judgment. Changes to the total estimated contract revenue or cost for a given project, either due to unexpected events or revisions to management’s initial estimates, are recognized in the period in which they are determined.
The following table provides information related to contract balances associated with our contracts with customers (in thousands):
|
|
September 28, |
|
|
December 31, |
|
||
Contract assets |
|
$ |
|
|
$ |
|
||
Contract assets, net of current portion |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
We generally receive payment for performance obligations within
Marketable equity securities are carried at fair value, with gains and losses in fair market value included in the determination of net income. The fair value of marketable equity securities is determined based on quoted market prices in active markets, as described in Note 9.
The following table sets forth market value, cost basis, and unrealized gains on equity securities (in thousands):
|
|
September 28, |
|
|
December 31, |
|
||
Fair value |
|
$ |
|
|
$ |
|
||
Cost basis |
|
|
|
|
|
|
||
Unrealized gain |
|
$ |
|
|
$ |
|
||
The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities (in thousands):
|
|
September 28, |
|
|
December 31, |
|
||
Gross unrealized gains |
|
$ |
|
|
$ |
|
||
Gross unrealized losses |
|
|
( |
) |
|
|
( |
) |
Net unrealized gains |
|
$ |
|
|
$ |
|
||
9
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
The following table shows the Company's net realized gains (losses) on marketable equity securities (in thousands):
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Realized gain |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sale proceeds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost basis of securities sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized gain |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized gain, net of taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
During the thirteen-week and thirty-nine week periods ended September 28, 2024, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $
During the thirteen-week and thirty-nine week periods ended September 30, 2023, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $
On
The Company accounted for the acquisition in accordance with ASC 805 “Business Combinations.” We recorded the assets acquired at their estimated fair value as of September 13, 2024. The pro forma effect of this acquisition has been omitted, as the effect is immaterial to the Company’s consolidated results of operations, financial position and cash flows. These values are based, in part, upon preliminary appraisals for certain assets and are subject to change when additional information concerning final asset values is obtained. The final purchase price allocations may result in adjustments to certain assets, including the residual amount allocated to goodwill, which would be deductible for income tax purposes.
Property and equipment |
|
$ |
|
|
Intangible assets |
|
|
|
|
|
|
$ |
|
The intangible assets acquired represent non-competition agreements that are being amortized over a period of
10
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
The changes in the carrying amount of goodwill during the thirty-nine weeks ended September 28, 2024 are as follows (in thousands):
Balance as of January 1, 2024 |
|
$ |
|
|
Goodwill impairment |
|
|
( |
) |
Balance as of September 28, 2024 |
|
$ |
|
As described in Note 1, “Basis of Presentation”, we recorded aggregate impairment charges of $
At both September 28, 2024 and December 31, 2023, $
Accrued expenses and other current liabilities are comprised of the following (in thousands):
|
|
September 28, |
|
|
December 31, |
|
||
Accrued payroll |
|
$ |
|
|
$ |
|
||
Accrued payroll taxes |
|
|
|
|
|
|
||
Driver escrow liabilities |
|
|
|
|
|
|
||
Legal settlements and claims |
|
|
|
|
|
|
||
Commissions, other taxes and other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Debt is comprised of the following (in thousands):
|
|
Interest Rates |
|
September 28, |
|
|
December 31, |
|
||
Outstanding Debt: |
|
|
|
|
|
|
|
|
||
Revolving Credit Facility (1) (2) |
|
|
$ |
|
|
$ |
|
|||
UACL Credit Agreement (2) |
|
|
|
|
|
|
|
|
||
Term Loan |
|
|
|
|
|
|
|
|||
Revolver |
|
|
|
|
|
|
|
|||
Equipment Financing (3) |
|
|
|
|
|
|
|
|||
Real Estate Facility (4) |
|
|
|
|
|
|
|
|||
Margin Facility (5) |
|
|
|
|
|
|
|
|||
Unamortized debt issuance costs |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||
Less current portion of long-term debt |
|
|
|
|
|
|
|
|
||
Total long-term debt, net of current portion |
|
|
|
$ |
|
|
$ |
|
||
(1)
11
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
(2)
(3)
(4)
(5)
The Company is also party to an interest rate swap agreement that qualifies for hedge accounting. The Company executed the swap agreement to fix a portion of the interest rate on its variable rate debt. Under the swap agreement, the Company receives interest at Term and pays a fixed rate of
FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date and expanded disclosures with respect to fair value measurements.
FASB ASC Topic 820 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
12
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
We have segregated all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the tables below (in thousands):
|
|
September 28, |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value Measurement |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Marketable securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Interest rate swap |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
|
|
December 31, |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value Measurement |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Marketable securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Interest rate swap |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
The valuation techniques used to measure fair value for the items in the tables above are as follows:
Our Revolving Credit Facility, UACL Credit Agreement and Real Estate Facility consist of variable rate borrowings. We categorize borrowings under these credit agreements as Level 2 in the fair value hierarchy. The carrying value of these borrowings approximate fair value because the applicable interest rates are adjusted frequently based on short-term market rates.
For our Equipment Financing, the fair values are estimated using discounted cash flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangements. We categorize these borrowings as Level 2 in the fair value hierarchy.
|
|
Carrying Value |
|
|
Estimated Fair |
|
||
|
|
|
|
|
|
|
||
Equipment promissory notes |
|
$ |
|
|
$ |
|
||
We have not elected the fair value option for any of our financial instruments.
13
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
As of September 28, 2024, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment. Right-of-use assets represent our right to use an underlying asset over the lease term and lease liabilities represent the obligation to make lease payments resulting from the lease agreement. We recognize a right-of-use asset and a lease liability on the effective date of a lease agreement. These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using our incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease is not readily determinable.
Our lease obligations typically do not include options to purchase the leased property, nor do they contain residual value guarantees or material restrictive covenants. Options to extend or terminate an agreement are included in the lease term when it becomes reasonably certain the option will be exercised. As of September 28, 2024, we were not reasonably certain of exercising any renewal or termination options, and as such, no adjustments were made to the right-of-use lease assets or corresponding liabilities.
Leases with an initial term of 12 months or less, short-term leases, are not recorded on the balance sheet. Lease expense for short-term and long-term operating leases is recognized on a straight-line basis over the lease term. For facility leases, variable lease costs include the costs of common area maintenance, taxes, and insurance for which we pay the lessors an estimate that is adjusted to actual expense on a quarterly or annual basis depending on the underlying contract terms. For equipment leases, variable lease costs may include additional fees associated with using equipment in excess of estimated amounts.
The following table summarizes our lease costs for the thirteen weeks and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):
|
|
Thirteen Weeks Ended September 28, 2024 |
|
|||||||||
|
|
With Affiliates |
|
|
With Third Parties |
|
|
Total |
|
|||
Lease cost |
|
|
|
|
|
|
|
|
|
|||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|||
Sublease income |
|
|
|
|
|
|
|
|
|
|||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
Thirteen Weeks Ended September 30, 2023 |
|
|||||||||
|
|
With Affiliates |
|
|
With Third Parties |
|
|
Total |
|
|||
Lease cost |
|
|
|
|
|
|
|
|
|
|||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|||
Sublease income |
|
|
|
|
|
|
|
|
|
|||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
14
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
|
|
Thirty-nine Weeks Ended September 29, 2024 |
|
|||||||||
|
|
With Affiliates |
|
|
With Third Parties |
|
|
Total |
|
|||
Lease cost |
|
|
|
|
|
|
|
|
|
|||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|||
Sublease income |
|
|
|
|
|
|
|
|
|
|||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
Thirty-nine Weeks Ended September 30, 2023 |
|
|||||||||
|
|
With Affiliates |
|
|
With Third Parties |
|
|
Total |
|
|||
Lease cost |
|
|
|
|
|
|
|
|
|
|||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|||
Sublease income |
|
|
|
|
|
|
|
|
|
|||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The following table summarizes other lease related information as of and for the thirty-nine week periods ended September 28, 2024 and September 30, 2023 (in thousands):
|
|
September 28, 2024 |
|
|||||||||
|
|
With |
|
|
With Third |
|
|
Total |
|
|||
Other information |
|
|
|
|
|
|
|
|
|
|||
Cash paid for amounts included in the measurement of operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Weighted-average remaining lease term (in years) |
|
|
|
|
|
|
|
|
|
|||
Weighted-average discount rate |
|
|
% |
|
|
% |
|
|
% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
September 30, 2023 |
|
|||||||||
|
|
With |
|
|
With Third |
|
|
Total |
|
|||
Other information |
|
|
|
|
|
|
|
|
|
|||
Cash paid for amounts included in the measurement of operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Right-of-use assets change due to lease termination |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted-average remaining lease term (in years) |
|
|
|
|
|
|
|
|
|
|||
Weighted-average discount rate |
|
|
% |
|
|
% |
|
|
% |
|||
15
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
Future minimum lease payments under these operating leases as of September 28, 2024, are as follows (in thousands):
|
|
With Affiliates |
|
|
With Third Parties |
|
|
Total |
|
|||
2024 (remaining) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2025 |
|
|
|
|
|
|
|
|
|
|||
2026 |
|
|
|
|
|
|
|
|
|
|||
2027 |
|
|
|
|
|
|
|
|
|
|||
2028 |
|
|
|
|
|
|
|
|
|
|||
Thereafter |
|
|
|
|
|
|
|
|
|
|||
Total required lease payments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Less amounts representing interest |
|
|
|
|
|
|
|
|
( |
) |
||
Present value of lease liabilities |
|
|
|
|
|
|
|
$ |
|
|||
Matthew T. Moroun is Chair of our Board of Directors and his son, Matthew J. Moroun, is a member of our Board of Directors. Certain Moroun family trusts beneficially own a majority of our outstanding shares. Matthew T. Moroun is trustee of these trusts with investment authority over the shares, and Frederick P. Calderone, a member of our Board of Directors, is special trustee of these trusts with voting authority over the shares. The Moroun family also owns or significantly influences the management and operating policies of other businesses engaged in transportation, insurance, business services, and real estate development and management. In the ordinary course of business, we procure from these companies certain supplementary administrative support services, including legal, human resources, tax, and IT infrastructure services. The Audit Committee of our Board of Directors reviews and approves related party transactions. The cost of these services is based on the actual or estimated utilization of the specific service.
We also purchase other services from our affiliates.
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Insurance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Real estate rent and related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Administrative support services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck fuel, maintenance and other operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contracted transportation services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
We pay the direct variable cost of maintenance, fueling and other operational support costs for services delivered at our affiliate’s trucking terminals that are geographically remote from our own facilities. Such costs are billed when incurred, paid on a routine basis, and reflect actual labor utilization, repair parts costs or quantities of fuel purchased.
We lease
We purchase employee medical, workers’ compensation, property and casualty, cargo, warehousing and other general liability insurance from an insurance company controlled by our controlling shareholder. In our Consolidated Balance Sheets, we record our insured claims liability and the related recovery in insurance and claims, and other receivables. At September 28, 2024 and December 31, 2023, there were $
16
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
Other services from affiliates, including contracted transportation services, are delivered to us on a per-transaction basis or pursuant to separate contractual arrangements provided in the ordinary course of business. At September 28, 2024 and December 31, 2023, amounts due to were $
During the thirty-nine weeks ended September 28, 2024, we purchased trailers from an affiliate totaling $
In June 2022, we executed a real estate contract with an affiliate to acquire a multi-building, office complex located in Warren, Michigan for $
Services provided by Universal to Affiliates
We periodically assist companies that are owned by our controlling shareholder by providing selected transportation and logistics services in connection with their specific customer contracts or purchase orders. Truck fueling and administrative expenses are presented net in operating expense.
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Contracted transportation services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Facilities and related support |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
At September 28, 2024 and December 31, 2023, amounts due from were $
In May 2024, we granted
In February 2024, we granted
In May 2023, we granted
In March 2023, we granted
In September 2021, we granted
17
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
In February 2020, we granted
In January 2020, we granted
A grantee’s vesting of restricted stock awards may be accelerated under certain conditions, including retirement.
The following table summarizes the status of the Company’s non-vested shares and related information for the period indicated:
|
|
Shares |
|
|
Weighted |
|
||
Non-vested at January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
|
|
$ |
|
||
Balance at September 28, 2024 |
|
|
|
|
$ |
|
||
In the thirty-nine week periods ended September 28, 2024 and September 30, 2023, the total grant date fair value of vested shares recognized as compensation costs was $
Basic earnings per common share amounts are based on the weighted average number of common shares outstanding, excluding outstanding non-vested restricted stock. Diluted earnings per common share include dilutive common stock equivalents determined by the treasury stock method. For the thirteen weeks and thirty-nine weeks ended September 28, 2024, there were
On
18
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
During the third quarter of 2024, we changed the way we aggregate our business units and adopted a new segment reporting structure. In connection with this change, the historical results of the terminated company-managed brokerage business is included in other non-reportable segments. As a result, we now report our financial results in
Operations aggregated in our contract logistics segment deliver value-added or dedicated transportation services to support in-bound logistics to industrial customers and major retailers on a contractual basis, generally pursuant to terms of one year or longer. Our intermodal segment is associated with local and regional drayage moves coordinated by company-managed terminals using a mix of owner-operators, company equipment and third-party capacity providers (broker carriers). Operations aggregated in our trucking segment are associated with individual freight shipments coordinated primarily by our agents using a mix of owner-operators, company equipment and broker carriers. Other non-reportable segments are comprised of legacy company-managed brokerage operations and the Company’s subsidiaries that provide support services to other subsidiaries.
Separate balance sheets are not prepared by segment, and we do not provide asset information by segment to the chief operating decision maker.
The following tables summarize information about our reportable segments for the thirteen week and thirty-nine week periods ended September 28, 2024 and September 30, 2023 (in thousands):
|
|
Operating Revenues |
|
|||||||||||||
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Contract logistics |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intermodal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trucking |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Eliminated Inter-segment Revenues |
|
|||||||||||||
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Contract logistics |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intermodal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trucking |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total eliminated inter-segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Income from Operations |
|
|||||||||||||
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Contract logistics |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intermodal |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Trucking |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total income from operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
19
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
Our principal commitments relate to long-term real estate leases and payment obligations to equipment vendors.
The Company is involved in certain other claims and pending litigation arising from the ordinary conduct of business. We also provide accruals for claims within our self-insured retention amounts. Based on the knowledge of the facts, and in certain cases, opinions of outside counsel, in the Company’s opinion the resolution of these claims and pending litigation will not have a material effect on our financial position, results of operations or cash flows. However, if we experience claims that are not covered by our insurance or that exceed our estimated claim reserve, it could increase the volatility of our earnings and have a materially adverse effect on our financial condition, results of operations or cash flows.
At September 28, 2024, approximately
On
On September 30, 2024, the Company acquired all of the outstanding shares of Parsec, LLC, OB Leasing, LLC, and Parsec Intermodal of Canada Ltd. (collectively, “Parsec”). Parsec is a provider of terminal management services to Class I, regional, and short-line railroads across North America. The cash purchase price was $
20
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Some of the statements and assumptions in this Form 10-Q are forward-looking statements. These statements identify prospective information. Important factors could cause actual results to differ, possibly materially, from those in the forward-looking statements. In some cases you can identify forward-looking statements by words such as “anticipate,” “expect,” “believe,” “targets,” “could,” “estimate,” “plan,” “intend,” “may,” “should,” “will” and “would” or other similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other “forward-looking” information. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. The factors listed in the section captioned “Risk Factors” in Part I, Item 1A in our Form 10-K for the year ended December 31, 2023 and Part II, Item 1A of this Form 10-Q, as well as any other cautionary language in these filings, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.
Forward-looking statements speak only as of the date the statements are made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.
Overview
Universal Logistics Holdings, Inc. is a holding company that owns subsidiaries engaged in providing a variety of customized transportation and logistics solutions throughout the United States, and in Mexico, Canada and Colombia. Our operating subsidiaries provide customers with a broad array of services across their entire supply chain, including value-added, dedicated, intermodal and trucking services.
Our operating subsidiaries provide a comprehensive suite of transportation and logistics solutions that allow our customers and clients to reduce costs and manage their global supply chains more efficiently. We market our services through a direct sales and marketing network focused on selling our portfolio of services to large customers in specific industry sectors through both our company-managed operations and through a network of agents who solicit freight business directly from shippers. We believe our flexible business model is highly scalable and will continue to support our growth with comparatively modest capital expenditure requirements. Our business model, combined with a disciplined approach to contract structuring and pricing, creates a highly flexible cost structure that allows us to expand and contract quickly in response to changes in demand from our customers.
We generate substantially all of our revenues through fees charged to customers for the transportation of freight and for the customized logistics services we provide. We also derive revenue from fuel surcharges, where separately identifiable, loading and unloading activities, equipment detention, container management and storage and other related services. Operations aggregated in our contract logistics segment deliver value-added and/or dedicated transportation services to support in-bound logistics to industrial customers and major retailers on a contractual basis, generally pursuant to terms of one year or longer. Our intermodal segment is associated with local and regional drayage moves predominately coordinated by company-managed terminals using a mix of owner-operators, company equipment and third-party capacity providers (broker carriers). Operations aggregated in our trucking segment are associated with individual freight shipments coordinated by our agents and company-managed terminals using a mix of owner-operators, company equipment and broker carriers.
The following discussion of the Company’s financial condition and results of operations should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 and the unaudited Consolidated Financial Statements and related notes contained in this Quarterly Report on Form 10-Q.
Current Economic Conditions
A prolonged period of inflationary pressures could cause interest rates, equipment, maintenance, labor and other operating costs to continue to increase. If the Company is unable to offset rising costs through corresponding customer rate increases, such increases could adversely affect our results of operations.
21
While operating cash flows may be negatively impacted by inflation-driven cost increases, the Company believes we will be able to finance our near term needs for working capital over the next twelve months, as well as any planned capital expenditures during such period, with cash balances, cash flows from operations, and loans and extensions of credit under our credit facilities and on margin against our marketable securities. Should the impact of inflation-driven cost increases last longer than anticipated, and/or our cash flow from operations decline more than expected, we may need to obtain additional financing. The Company’s ability to fund future operating expenses and capital expenditures, as well as its ability to meet future debt service obligations or refinance indebtedness will depend on future operating performance, which will be affected by general economic, financial, and other factors beyond our control.
Operating Revenues
For financial reporting, we broadly group our services into the following categories: truckload services, brokerage services, intermodal services, dedicated services and value-added services. Our truckload, brokerage and intermodal services are associated with individual freight shipments coordinated by our agents and company-managed terminals, while our dedicated and value-added services are specific to customers on a contractual basis, generally pursuant to contract terms of one year or longer. The following table sets forth operating revenues resulting from each of these categories for the thirteen weeks and thirty-nine weeks ended September 28, 2024 and September 30, 2023, presented as a percentage of total operating revenues:
|
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
|||||
Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Truckload services |
|
|
14.9 |
% |
|
|
16.5 |
% |
|
|
12.5 |
% |
|
|
13.2 |
% |
|
Brokerage services |
|
|
9.9 |
|
|
|
13.5 |
|
|
|
11.3 |
|
|
|
14.6 |
|
|
Intermodal services |
|
|
17.7 |
|
|
|
20.6 |
|
|
|
16.7 |
|
|
|
22.8 |
|
|
Dedicated services |
|
|
20.5 |
|
|
|
20.6 |
|
|
|
19.3 |
|
|
|
20.3 |
|
|
Value-added services |
|
|
37.0 |
|
|
|
28.8 |
|
|
|
40.2 |
|
|
|
29.1 |
|
|
Total operating revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
Results of Operations
Thirteen Weeks Ended September 28, 2024 Compared to Thirteen Weeks Ended September 30, 2023
The following table sets forth items derived from our consolidated statements of income for the thirteen weeks ended September 28, 2024 and September 30, 2023:
|
|
Thirteen Weeks Ended |
|
|||||||||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
Percent Change in Dollar Amount |
|
|||||||||||
(Dollars in millions) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
% |
|
|||||
Operating revenues |
|
$ |
426,833 |
|
|
|
100.0 |
% |
|
$ |
421,251 |
|
|
|
100.0 |
% |
|
|
1.3 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Purchased transportation and equipment rent |
|
|
120,700 |
|
|
|
28.3 |
|
|
|
147,470 |
|
|
|
35.0 |
|
|
|
(18.2 |
) |
Direct personnel and related benefits |
|
|
132,081 |
|
|
|
30.9 |
|
|
|
134,866 |
|
|
|
32.0 |
|
|
|
(2.1 |
) |
Operating supplies and expenses |
|
|
60,532 |
|
|
|
14.2 |
|
|
|
43,060 |
|
|
|
10.2 |
|
|
|
40.6 |
|
Commission expense |
|
|
6,985 |
|
|
|
1.6 |
|
|
|
8,334 |
|
|
|
2.0 |
|
|
|
(16.2 |
) |
Occupancy expense |
|
|
11,179 |
|
|
|
2.6 |
|
|
|
10,913 |
|
|
|
2.6 |
|
|
|
2.4 |
|
General and administrative |
|
|
13,037 |
|
|
|
3.1 |
|
|
|
13,633 |
|
|
|
3.2 |
|
|
|
(4.4 |
) |
Insurance and claims |
|
|
5,681 |
|
|
|
1.3 |
|
|
|
6,828 |
|
|
|
1.6 |
|
|
|
(16.8 |
) |
Depreciation and amortization |
|
|
30,284 |
|
|
|
7.1 |
|
|
|
19,386 |
|
|
|
4.6 |
|
|
|
56.2 |
|
Impairment expense |
|
|
3,720 |
|
|
|
0.9 |
|
|
|
— |
|
|
|
— |
|
|
n/m |
|
|
Total operating expenses |
|
|
384,199 |
|
|
|
90.0 |
|
|
|
384,490 |
|
|
|
91.3 |
|
|
|
(0.1 |
) |
Income from operations |
|
|
42,634 |
|
|
|
10.0 |
|
|
|
36,761 |
|
|
|
8.7 |
|
|
|
16.0 |
|
Interest income (expense), net |
|
|
(7,416 |
) |
|
|
(1.7 |
) |
|
|
(6,495 |
) |
|
|
(1.5 |
) |
|
|
14.2 |
|
Other non-operating income |
|
|
4 |
|
|
|
0.0 |
|
|
|
588 |
|
|
|
0.1 |
|
|
|
(99.3 |
) |
Income before income taxes |
|
|
35,222 |
|
|
|
8.3 |
|
|
|
30,854 |
|
|
|
7.3 |
|
|
|
14.2 |
|
Income tax expense |
|
|
8,682 |
|
|
|
2.1 |
|
|
|
7,807 |
|
|
|
1.8 |
|
|
|
11.2 |
|
Net income |
|
$ |
26,540 |
|
|
|
6.2 |
% |
|
$ |
23,047 |
|
|
|
5.5 |
% |
|
|
15.2 |
% |
22
Operating revenues. The overall increase in operating revenues was primarily due to an increase in our contract logistics segment revenues. This increase was partially offset by decreases in our transactional transportation-related services. The primary driver in our contract logistics segment was the recently awarded specialty development project. Operating revenues included separately-identified fuel surcharges of $21.9 million in the third quarter 2024, compared to $28.2 million in the third quarter 2023. Also included in operating revenues were other accessorial charges such as detention, demurrage and storage, which totaled $8.9 million during the third quarter 2024 compared to $9.9 million one year earlier.
Purchased transportation and equipment rent. Purchased transportation and equipment rent generally increases or decreases in proportion to the revenues generated through owner-operators and other third party providers. These fluctuations are generally correlated with changes in demand for transactional transportation-related services. The absolute decrease in purchased transportation and equipment rental costs was primarily the result of an overall decrease in transactional transportation-related services. In the third quarter 2024, transactional transportation-related service revenues decreased 14.8% compared to the prior year.
Direct personnel and related benefits. Trends in direct personnel and benefit costs are generally correlated with changes in operating facilities and headcount requirements and, therefore, fluctuate correspondingly with the level of demand for our staffing needs in our contract logistics segment, which includes value-added services and dedicated transportation, as well as the use of employee drivers in certain of our intermodal operations. The decrease in the third quarter 2024 was due to a decrease in headcount in our intermodal business. While generalizations about the impact of personnel and related benefits costs are difficult, we manage compensation and staffing levels, including the use of contract labor, to maintain target economics based on near-term projections of demand for our services.
Operating supplies and expenses. Operating supplies and expenses include items such as fuel, maintenance, cost of materials, communications, utilities and other operating expenses, and generally relate to fluctuations in customer demand. The main element driving the change was an increase in the expenses incurred in connection with the recently awarded contract logistics specialty development project.
Commission expense. Commission expense decreased due to decreased revenue in our agency-based truckload business.
Occupancy expense. The increase in occupancy expense was attributable to an increase in building rents and property taxes.
General and administrative. The decrease in general and administrative expense was primarily due to a decrease in salaries, wages, and benefits as well as professional fees.
Insurance and claims. The decrease in insurance and claims expense was primarily due to a decrease in cargo claims expense.
Depreciation and amortization. The increase in depreciation and amortization expense resulted from a $9.3 million increase in depreciation expense and a $1.6 million increase in amortization expense.
Impairment expense. The increase in impairment expense primarily relates to the goodwill impairment charges resulting from the closure of our company-managed brokerage operations.
Interest expense, net. The increase in net interest expense reflects an increase in our outstanding borrowings. As of September 28, 2024, our outstanding borrowings were $561.2 million compared to $392.0 million at September 30, 2023.
Other non-operating income. Other non-operating income decreased by $0.6 million in third quarter 2024.
Income tax expense. Our effective income tax rate was 24.6% in the third quarter 2024 compared to 25.3% in the third quarter 2023. The increase in income taxes is primarily the result of an increase in taxable income.
23
Thirty-nine Weeks Ended September 28, 2024 Compared to Thirty-nine Weeks Ended September 30, 2023
The following table sets forth items derived from our consolidated statements of income for the thirty-nine weeks ended September 28, 2024 and September 30, 2023:
|
|
Thirty-nine Weeks Ended |
|
|||||||||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
Percent Change in Dollar Amount |
|
|||||||||||
(Dollars in millions) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
% |
|
|||||
Operating revenues |
|
$ |
1,380,904 |
|
|
|
100.0 |
% |
|
$ |
1,271,219 |
|
|
|
100.0 |
% |
|
|
8.6 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Purchased transportation and equipment rent |
|
|
382,628 |
|
|
|
27.7 |
|
|
|
443,434 |
|
|
|
34.9 |
|
|
|
(13.7 |
) |
Direct personnel and related benefits |
|
|
408,381 |
|
|
|
29.6 |
|
|
|
412,004 |
|
|
|
32.4 |
|
|
|
(0.9 |
) |
Operating supplies and expenses |
|
|
216,914 |
|
|
|
15.7 |
|
|
|
130,351 |
|
|
|
10.3 |
|
|
|
66.4 |
|
Commission expense |
|
|
22,485 |
|
|
|
1.6 |
|
|
|
24,149 |
|
|
|
1.9 |
|
|
|
(6.9 |
) |
Occupancy expense |
|
|
32,189 |
|
|
|
2.3 |
|
|
|
33,106 |
|
|
|
2.6 |
|
|
|
(2.8 |
) |
General and administrative |
|
|
41,242 |
|
|
|
3.0 |
|
|
|
38,967 |
|
|
|
3.1 |
|
|
|
5.8 |
|
Insurance and claims |
|
|
20,722 |
|
|
|
1.5 |
|
|
|
20,795 |
|
|
|
1.6 |
|
|
|
(0.4 |
) |
Depreciation and amortization |
|
|
87,795 |
|
|
|
6.4 |
|
|
|
57,061 |
|
|
|
4.5 |
|
|
|
53.9 |
|
Impairment expense |
|
|
3,720 |
|
|
|
0.3 |
|
|
|
— |
|
|
|
— |
|
|
n/m |
|
|
Total operating expenses |
|
|
1,216,076 |
|
|
|
88.1 |
|
|
|
1,159,867 |
|
|
|
91.2 |
|
|
|
4.8 |
|
Income from operations |
|
|
164,828 |
|
|
|
11.9 |
|
|
|
111,352 |
|
|
|
8.8 |
|
|
|
48.0 |
|
Interest income (expense), net |
|
|
(20,378 |
) |
|
|
(1.5 |
) |
|
|
(16,590 |
) |
|
|
(1.3 |
) |
|
|
22.8 |
|
Other non-operating income |
|
|
2,007 |
|
|
|
0.1 |
|
|
|
885 |
|
|
|
(0.0 |
) |
|
|
126.8 |
|
Income before income taxes |
|
|
146,457 |
|
|
|
10.5 |
|
|
|
95,647 |
|
|
|
7.5 |
|
|
|
53.1 |
|
Income tax expense |
|
|
36,726 |
|
|
|
2.6 |
|
|
|
24,159 |
|
|
|
1.9 |
|
|
|
52.0 |
|
Net income |
|
$ |
109,731 |
|
|
|
7.9 |
% |
|
$ |
71,488 |
|
|
|
5.6 |
% |
|
|
53.5 |
% |
Operating revenues. The overall increase in operating revenues was primarily due to an increase in our contract logistics segment revenues. This increase was partially offset by decreases in our transactional transportation-related services. The primary driver in our contract logistics segment was the recently awarded specialty development project. Operating revenues included separately-identified fuel surcharges of $71.1 million in the thirty-nine weeks ended September 28, 2024, compared to $90.7 million in the thirty-nine weeks ended September 30, 2023. Also included in operating revenues were other accessorial charges such as detention, demurrage and storage, which totaled $23.3 million during the thirty-nine weeks ended September 28, 2024, compared to $47.5 million one year earlier.
Purchased transportation and equipment rent. Purchased transportation and equipment rent generally increases or decreases in proportion to the revenues generated through owner-operators and other third party providers. These fluctuations are generally correlated with changes in demand for transactional transportation-related services. The absolute decrease in purchased transportation and equipment rental costs was primarily the result of an overall decrease in transactional transportation-related services. In the thirty-nine weeks ended September 28, 2024, transactional transportation-related service revenues decreased 13.1% compared to the prior year.
Direct personnel and related benefits. Trends in direct personnel and benefit costs are generally correlated with changes in operating facilities and headcount requirements and, therefore, fluctuate correspondingly with the level of demand for our staffing needs in our contract logistics segment, which includes value-added services and dedicated transportation, as well as the use of employee drivers in certain of our intermodal operations. The decrease in the thirty-nine weeks ended September 28, 2024, was due to a decrease in headcount in our intermodal and value-added businesses. While generalizations about the impact of personnel and related benefits costs are difficult, we manage compensation and staffing levels, including the use of contract labor, to maintain target economics based on near-term projections of demand for our services.
Operating supplies and expenses. Operating supplies and expenses include items such as fuel, maintenance, cost of materials, communications, utilities and other operating expenses, and generally relate to fluctuations in customer demand. The main element driving the change was an increase in the expenses incurred in connection with the recently awarded contract logistics specialty development project.
Commission expense. Commission expense decreased due to decreased brokerage revenue in our agency-based truckload business.
Occupancy expense. The decrease in occupancy expense was attributable to a decrease in building rents. This was partially offset by an increase in property taxes.
General and administrative. The increase in general and administrative expense was primarily due to an increase in salaries, wages, and benefits as well as professional fees.
24
Insurance and claims. The decrease in insurance and claims expense was primarily due to an increase in auto liability claims expense.
Depreciation and amortization. The increase in depreciation and amortization expense resulted from a $26.0 million increase in depreciation expense and a $4.8 million increase in amortization expense. During the first half 2024, Universal revised the estimated useful life and salvage value of certain equipment, and these adjustments resulted in additional depreciation expense of $11.3 million during the period.
Impairment expense. The increase in impairment expense primarily relates to the goodwill impairment charges resulting from the closure of our company-managed brokerage operations.
Interest expense, net. The increase in net interest expense reflects an increase in our outstanding borrowings. As of September 28, 2024, our outstanding borrowings were $561.2 million compared to $392.0 million at September 30, 2023.
Other non-operating income. Other non-operating income increased by $1.1 million in the thirty-nine weeks ended September 28, 2024 and includes a $0.9 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income.
Income tax expense. Our effective income tax rate was 25.1% in thirty-nine weeks ended September 28, 2024, compared to 25.3% in the thirty-nine weeks ended September 30, 2023. The increase in income taxes is primarily the result of an increase in taxable income.
Segment Financial Results
We report our financial results in three distinct reportable segments: contract logistics, intermodal and trucking, which are based primarily on the services each segment provides. This presentation reflects the manner in which management evaluates our operating segments, including an evaluation of economic characteristics and applicable aggregation criteria.
The following tables summarize information about our reportable segments for the thirteen week and thirty-nine week periods ended September 28, 2024 and September 30, 2023 (in thousands):
|
|
Operating Revenues |
|
|||||||||||||
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Contract logistics |
|
$ |
245,194 |
|
|
$ |
208,129 |
|
|
$ |
822,301 |
|
|
$ |
628,228 |
|
Intermodal |
|
|
77,632 |
|
|
|
87,974 |
|
|
|
235,649 |
|
|
|
295,736 |
|
Trucking |
|
|
87,047 |
|
|
|
97,085 |
|
|
|
248,142 |
|
|
|
258,043 |
|
Other |
|
|
16,960 |
|
|
|
28,063 |
|
|
|
74,812 |
|
|
|
89,212 |
|
Total operating revenues |
|
$ |
426,833 |
|
|
$ |
421,251 |
|
|
$ |
1,380,904 |
|
|
$ |
1,271,219 |
|
|
|
Income from Operations |
|
|||||||||||||
|
|
Thirteen Weeks Ended |
|
|
Thirty-nine Weeks Ended |
|
||||||||||
|
|
September 28, |
|
|
September 30, |
|
|
September 28, |
|
|
September 30, |
|
||||
Contract logistics |
|
$ |
45,623 |
|
|
$ |
35,103 |
|
|
$ |
179,990 |
|
|
$ |
95,673 |
|
Intermodal |
|
|
(1,127 |
) |
|
|
(4,470 |
) |
|
|
(18,058 |
) |
|
|
2,568 |
|
Trucking |
|
|
7,122 |
|
|
|
6,558 |
|
|
|
15,175 |
|
|
|
14,770 |
|
Other |
|
|
(8,984 |
) |
|
|
(430 |
) |
|
|
(12,279 |
) |
|
|
(1,659 |
) |
Total income from operations |
|
$ |
42,634 |
|
|
$ |
36,761 |
|
|
$ |
164,828 |
|
|
$ |
111,352 |
|
Thirteen Weeks Ended September 28, 2024 Compared to Thirteen Weeks Ended September 30, 2023
In the contract logistics segment, which includes our value-added and dedicated services, operating revenues increased 17.8%. The increase in operating revenues was primarily due to our recently awarded specialty development project. At the end of the third quarter 2024, we managed 70 value-added programs compared to 73 in the third quarter 2023. Included in contract logistics segment revenues for the thirteen weeks ended September 28, 2024, were $7.0 million in separately identified fuel surcharges from dedicated transportation services, compared to $9.1 million in the same period last year. Income from operations increased $10.5 million and operating margin, as a percentage of revenue was 18.6% for the third quarter 2024, compared to 16.9% in the third quarter 2023.
25
Operating revenues in the intermodal segment decreased 11.8% primarily due to a decrease in the number of loads hauled. Included in intermodal segment revenues for the third quarter 2024 were $10.0 million in separately identified fuel surcharges, compared to $12.7 million in the same period last year. Intermodal segment revenues also include other accessorial charges such as detention, demurrage and storage, which totaled $8.9 million during the third quarter 2024 compared to $9.9 million in the third quarter 2023. Load volumes declined 13.2%, while the average operating revenue per load, excluding fuel surcharges, increased 1.8% on a year-over-year basis. As a percentage of revenue, operating margin in the intermodal segment for the third quarter 2024 was (1.5)%, compared to (5.1)% one year earlier.
In the trucking segment, operating revenues decreased 10.3% primarily due to a decrease in the number of loads hauled. Third quarter 2024 trucking segment revenues included $24.3 million of brokerage services compared to $28.8 million during the same period last year. Also included in our trucking segment revenues were $4.8 million in separately identified fuel surcharges during the third quarter 2024 compared to $6.3 million in fuel surcharges in the third quarter 2023. On a year-over-year basis, load volumes declined 16.1%; however, the average operating revenue per load, excluding fuel surcharges, increased 9.3%, supported by our specialty, heavy-haul wind business. As a percentage of revenue, operating margin in the trucking segment for the thirteen weeks ended September 28, 2024, was 8.2% compared to 6.8% for the thirteen weeks ended September 30, 2023.
Thirty-nine Weeks Ended September 28, 2024 Compared to Thirty-nine Weeks Ended September 30, 2023
In the contract logistics segment, which includes our value-added and dedicated services, operating revenues increased 30.9%. The increase in operating revenues was primarily due to our recently awarded specialty development project. At the end of the third quarter 2024, we managed 70 value-added programs compared to 73 in the prior year. Included in contract logistics segment revenues for the thirty-nine weeks ended September 28, 2024, were $23.7 million in separately identified fuel surcharges from dedicated transportation services, compared to $27.4 million in the same period last year. Income from operations increased $84.3 million and operating margin, as a percentage of revenue was 21.9% for the thirty-nine weeks ended September 28, 2024, compared to 15.2% in the thirty-nine weeks ended September 30, 2023.
Operating revenues in the intermodal segment decreased 20.3% primarily due to a decrease in the average operating revenue per load and the number of loads hauled. Included in intermodal segment revenues for the thirty-nine weeks ended September 28, 2024 were $31.5 million in separately identified fuel surcharges, compared to $43.4 million in the same period last year. Intermodal segment revenues also include other accessorial charges such as detention, demurrage and storage, which totaled $23.3 million during the thirty-nine weeks ended September 28, 2024 compared to $47.5 million in the thirty-nine weeks ended September 30, 2023. Load volumes declined 10.6%, while the average operating revenue per load, excluding fuel surcharges, fell 1.4% on a year-over-year basis. As a percentage of revenue, operating margin in the intermodal segment for the thirty-nine weeks ended September 28, 2024 was (7.7)%, compared to 0.9% one year earlier.
In the trucking segment, operating revenues decreased 3.8% primarily due to a decrease in the number of loads hauled. Trucking segment revenues included $78.4 million of brokerage services compared to $94.2 million during the same period last year. Also included in our trucking segment revenues were $15.9 million in separately identified fuel surcharges during the thirty-nine weeks ended September 28, 2024 compared to $19.9 million in fuel surcharges in the thirty-nine weeks ended September 30, 2023. On a year-over-year basis, load volumes declined 11.4%; however, the average operating revenue per load, excluding fuel surcharges, increased 10.1%, supported by our specialty, heavy-haul wind business. As a percentage of revenue, operating margin in the trucking segment for the thirty-nine weeks ended September 28, 2024, was 6.1% compared to 5.7% for the thirty-nine weeks ended September 30, 2023.
Liquidity and Capital Resources
Our primary sources of liquidity are funds generated by operations, loans and extensions of credit under our credit facilities, on margin against our marketable securities and from installment notes, and proceeds from the sales of marketable securities. We use secured asset lending to fund a substantial portion of purchases of tractors, trailers and material handling equipment.
We employ a flexible operating strategy which we believe lowers our capital expenditure requirements. In general, our facilities used in our value-added services are leased on terms that are either substantially matched to our customer’s contracts, are month-to-month or are provided to us by our customers. We also utilize owner-operators and third-party carriers to provide a significant portion of our transportation and specialized services. A significant portion of the tractors and trailers used in our business are provided by our owner-operators. In addition, our use of agents reduces our overall need for large terminals. As a result, our capital expenditure requirements are limited in comparison to most large transportation and logistics service providers, which maintain significant properties and sizable fleets of owned tractors and trailers.
26
During the thirty-nine weeks ended September 28, 2024, our capital expenditures totaled $210.8 million. These expenditures primarily consisted of transportation equipment, investments in support of our value-added service operations and the expansion of our terminal network. Our flexible business model depends somewhat on the customized solutions we implement for specific customers. As a result, our capital expenditures will depend on specific new contracts and the overall age and condition of our owned transportation equipment. Through the remainder of 2024, we expect our capital expenditures to be in the range of $105 million to $120 million. We expect to make these capital expenditures for the acquisition of transportation equipment, to support new and existing value-added service operations, to expand our owned terminal network, and for improvements to our existing terminal yard and container facilities.
We have a cash dividend policy that anticipates a regular dividend of $0.42 per share of common stock, payable in quarterly increments of $0.105 per share of common stock. After considering the regular quarterly dividends made during the year, the Board of Directors also evaluates the potential declaration of an annual special dividend payable in the first quarter of each year. The Board of Directors did not declare a special dividend in the first quarter of 2024. On October 24, 2024, our Board of Directors did declare the regular quarterly cash dividend of $0.105 per share of common stock payable January 2, 2025 to shareholders of record at the close of business on December 2, 2024. During the year ended December 31, 2023, we paid a total of $0.42 per common share, or $11.0 million. Future dividend policy and the payment of dividends, if any, will be determined by the Board of Directors in light of circumstances then existing, including our earnings, financial condition and other factors deemed relevant by the Board of Directors.
On September 30, 2024, we acquired all of the outstanding shares of Parsec, LLC, OB Leasing, LLC, and Parsec Intermodal of Canada Ltd. (collectively, “Parsec”). The cash purchase price was $193.6 million, subject to customary post-closing adjustments. We borrowed funds from our existing Revolving Credit Facility to finance the acquisition. After giving effect to the borrowings under the credit facility, the Company’s subsidiaries were in compliance with all of the facility’s covenants and approximately $81.7 million was available for borrowing on the revolver.
We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources. The availability of financing or equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions. If such additional borrowing, lease financing, or equity capital is not available at the time we need it, then we may need to borrow more under the Revolving Credit Facility (if not then fully drawn), extend the maturity of then-outstanding debt, or rely on alternative financing arrangements. There can be no assurance that we will be able to obtain additional debt under our existing financial arrangements to satisfy our ongoing capital requirements. However, we believe that our existing liquidity and sources of capital are sufficient to support our operations over the next 12 months.
We also continually evaluate business development opportunities, including potential acquisitions that fit our strategic plans. There can be no assurance that we will identify any opportunities that fit our strategic plans or will be able to execute any such opportunities on terms acceptable to us. Depending on prospective consideration to be paid for an acquisition, any such opportunities would be financed first from available cash and cash equivalents and availability of borrowings under our credit facilities.
Revolving Credit, Promissory Notes and Term Loan Agreements
Our Revolving Credit Facility provides for a $400 million revolver at a variable rate of interest based on index-adjusted SOFR or a base rate and matures on September 30, 2027. The Revolving Credit Facility, which is secured by cash, deposits, accounts receivable, and selected other assets of the applicable borrowers, includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions. Our Revolving Credit Facility includes an accordion feature which allows us to increase availability by up to $200 million upon our request. At September 28, 2024, we were in compliance with all its covenants, and $291.0 million was available for borrowing.
Our UACL Credit Agreement provides for maximum borrowings of $90 million in the form of an $80 million term loan and a $10 million revolver at a variable rate of interest based on index-adjusted SOFR or a base rate and matures on September 30, 2027. The UACL Credit Agreement, which is secured by cash, deposits, accounts receivable, and selected other assets of the applicable borrowers, includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions. Our UACL Credit Agreement includes an accordion feature which allows us to increase availability by up to $30 million upon our request. At September 28, 2024, we were in compliance with all its covenants, and $5.0 million was available for borrowing.
A wholly owned subsidiary issued a series of promissory notes in order to finance transportation equipment. The notes are secured by liens on specific titled vehicles, are generally payable in 60 monthly installments and bear interest at fixed rates ranging from 2.25% to 7.31%.
Certain wholly owned subsidiaries entered into a $165.4 million term loan facility to repay outstanding balances under a then-existing term loan and certain other real estate notes. The facility matures on April 29, 2032 and is secured by first-priority mortgages on specific parcels of real estate owned by the Company, including all land and real property improvements, and first-priority assignments of rents and related leases of the loan parties. The facility includes customary affirmative and negative covenants, and principal and interest is payable on the facility on a monthly basis, based on an annual amortization of 10%. The facility bears interest at Term SOFR, plus an applicable margin equal to 2.12%. At September 28, 2024, we were in compliance with all covenants under the facility.
27
We also maintain a short-term line of credit secured by our portfolio of marketable securities. It bears interest at Term SOFR plus 1.10%. The amount available under the margin facility is based on a percentage of the market value of the underlying securities. We did not have any amounts advanced against the line as of September 28, 2024, and the maximum available borrowings were $5.9 million.
Discussion of Cash Flows
At September 28, 2024, we had cash and cash equivalents of $11.8 million compared to $12.5 million at December 31, 2023. Operating activities provided $52.6 million in net cash, financing activities provided an additional $166.4 million, and we used $219.0 million in investing activities.
The $52.6 million in net cash provided by operations was primarily attributed to $109.7 million of net income, which reflects non-cash depreciation and amortization, impairment expense, noncash lease expense, gains on marketable equity securities, losses on equipment sales, amortization of debt issuance costs, stock-based compensation, provisions for credit losses totaling, and a change in deferred income taxes totaling $141.1 million, net. Net cash provided by operating activities also reflects an aggregate increase in net working capital totaling $198.2 million. The primary drivers behind the increase in working capital were principal reductions in operating lease liabilities during the period, increases in contract assets, trade and other receivables, and decreases in other long-term liabilities and income taxes payable. These were partially offset increases in trade accounts payable, accrued expenses and other current liabilities, and accruals for insurance and claims. Affiliate transactions decreased net cash provided by operating activities by $2.8 million. The decrease in net cash resulted from a decrease in accounts payable to affiliates of $2.2 million and an increase in accounts receivable from affiliates of $0.6 million.
The $219.0 million in net cash used in investing activities primarily consisted of $210.8 million in capital expenditures and $10.0 million for the acquisition of East Texas Heavy Haul. These expenditures were partially offset by $1.8 million in proceeds from the sale of equipment.
Financing activities provided $166.4 million in net cash during the period. We had outstanding borrowings totaling $561.2 million at September 28, 2024 compared to $386.4 million at December 31, 2023. During the period, we made payments on term loan and equipment and real estate notes totaling $79.9 million, borrowed $162.7 million for new equipment and had net borrowings on our revolving lines of credit totaling $92.1 million. During the period, we also paid cash dividends of $8.3 million and purchased $0.1 million of treasury stock.
Off Balance Sheet Arrangements
None.
Critical Accounting Policies
A summary of critical accounting policies is presented in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies,” of our Form 10-K for the year ended December 31, 2023. There have been no changes in our accounting policies during the thirteen weeks ended September 28, 2024.
Seasonality
Generally, demand for our value-added services delivered to existing customers increases during the second calendar quarter of each year as a result of the automotive industry’s spring selling season. Conversely, such demand generally decreases during the third quarter of each year due to the impact of scheduled OEM customer plant shutdowns in July for vacations and changeovers in production lines for new model years.
Our value-added services business is also impacted in the fourth quarter by plant shutdowns during the December holiday period. Prolonged adverse weather conditions, particularly in winter months, can also adversely impact margins due to productivity declines and related challenges meeting customer service requirements.
Additionally, our transportation services business, excluding dedicated transportation tied to specific customer supply chains, is generally impacted by decreased activity during the post-holiday winter season and, in certain states during hurricane season, because some shippers reduce their shipments and inclement weather impedes trucking operations or underlying customer demand.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have not been any material changes to the Company’s market risk during the thirteen weeks ended September 28, 2024. For additional information, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
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ITEM 4: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as amended (or the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 28, 2024, our disclosure controls and procedures were effective in causing the material information required to be disclosed in the reports that it files or submits under the Exchange Act (i) to be recorded, processed, summarized and reported, to the extent applicable, within the time periods required for us to meet the Securities and Exchange Commission’s (or SEC) filing deadlines for these reports specified in the SEC’s rules and forms and (ii) to be accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Remediation of Prior Material Weakness in Internal Control Over Financial Reporting
As disclosed in Part II – Item 9A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, management identified a material weakness in internal control over financial reporting to identify potential data-entry errors related to our contracted rates and quantities and their associated invoices and amounts recorded as unbilled revenue.
During 2024, management executed upon its previously disclosed remediation plan, which included: (i) modifying our applicable policies and procedures for timely review and approval of contracted rates that are entered into the system; (ii) adding monitoring controls that require a secondary and tertiary review of all contracted rates entered into the system to ensure they are reviewed timely and entered accurately; and (iii) establishing a reserve on receivables that are within customer pay terms based upon history of rate corrections.
Our management completed testing of the implemented controls during the quarter ended September 28, 2024 and found them to be operating effectively. As a result, management has concluded that the material weakness in internal control over financial reporting has been remediated as of September 28, 2024.
Changes in Internal Control over Financial Reporting
We took actions to remediate the material weakness relating to our internal controls over financial reporting, as described above. Except as otherwise described herein, there was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
For information regarding legal proceedings, see Note 16 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report.
ITEM 1A: RISK FACTORS
There have been no material changes to our risk factors as previously disclosed in Item 1A to Part 1 of our Form 10-K for the fiscal year ended December 31, 2023.
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4: MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5: OTHER INFORMATION
Trading Arrangements
None of the Company’s directors or officers
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ITEM 6: EXHIBITS
The exhibits listed on the Exhibit Index are furnished as part of this quarterly report on Form 10-Q.
Exhibit |
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Description |
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3.1 |
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3.2 |
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Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3(i)-1 and 3(i)-2 to the Registrant’s Current Report on Form 8-K filed on November 1, 2012) |
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3.3 |
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3.4 |
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4.1 |
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4.2 |
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10.1 |
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10.2 |
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10.3 |
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10.4 |
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10.5 |
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10.6 |
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31.1* |
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31.2* |
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32.1** |
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101.INS* |
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Inline XBRL Instance Document |
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101.SCH* |
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Inline XBRL Schema Document |
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101.CAL* |
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Inline XBRL Calculation Linkbase Document |
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101.DEF* |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB* |
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Inline XBRL Labels Linkbase Document |
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101.PRE* |
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Inline XBRL Presentation Linkbase Document |
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104* |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
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Universal Logistics Holdings, Inc. |
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(Registrant) |
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Date: November 7, 2024 |
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By: |
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/s/ Tim Phillips |
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Tim Phillips Chief Executive Officer |
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Date: November 7, 2024 |
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By: |
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/s/ Jude Beres |
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Jude Beres Chief Financial Officer |
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