ulh-ex991

Universal Logistics Holdings, Inc. Reports Consolidated Second Quarter 2018 Financial Results

Warren, MI – July 26, 2018 — Universal Logistics Holdings, Inc. (NASDAQ: ULH), a leading asset-light provider of customized transportation and logistics solutions, today reported consolidated second quarter 2018 net income of $17.7 million, or $0.62 per basic and diluted share, a 520% increase over the same period last year. Universal also reported second quarter 2018 total operating revenues of $365.9 million, the highest quarterly revenue ever reported. This compares to net income of $2.7 million, or $0.10 per basic and diluted share, during second quarter 2017 on total operating revenues of $305.2 million.

Operating revenues from truckload services increased $6.0 million to $82.7 million, compared to $76.7 million for the same period last year. Included in truckload revenues for the recently completed quarter were $9.2 million in separately identified fuel surcharges compared to $7.1 million during the same period last year. The increase in truckload services reflects a 12.7% increase in average operating revenue per load, excluding fuel surcharges. This increase was partially offset by a 7.2% decrease in the number of loads hauled. During the quarter ended June 30, 2018, Universal moved 74,878 loads compared to 80,720 during the same period last year.

Revenues for the second quarter 2018 from brokerage services increased $27.8 million, or 43.0%, to $92.5 million compared to $64.7 million one year earlier. The growth in brokerage revenues is due to increases in the average operating revenue per load and in the number of loads hauled. Universal’s average operating revenue per load increased 30.1% to $1,659 per load, up from $1,275 per load one year earlier. The number of brokerage loads hauled in the second quarter 2018 increased 8.9% to 53,101 compared to 48,768 during the same period last year.

Intermodal services revenues increased $16.2 million, or 41.9%, to $54.9 million in the second quarter 2018, up from $38.7 million during the same period last year. Intermodal revenues for the recently completed quarter included $9.8 million of revenues from Universal’s acquisition of Fore Transportation in February 2018. Second quarter 2018 intermodal revenues also included $5.8 million in separately identified fuel surcharges, compared to $3.9 million during the same period last year. Intermodal services growth included increases both in the average operating revenue per load, excluding fuel surcharges, and in the number of loads hauled. During the quarter ended June 30, 2018, Universal moved 98,468 intermodal loads, compared to 87,952 loads during the same period last year, an increase of 12.0%, while also increasing its average operating revenue per load, excluding fuel surcharges, by 27.4%.

Second quarter 2018 operating revenues from dedicated services increased to $28.7 million compared to $24.4 million one year earlier. Dedicated services revenues included $4.5 million in separately identified fuel surcharges in the second quarter 2018 compared to $3.3 million during the same period last year. The increase in dedicated services revenues is also attributable to increases in the number of loads hauled and in the average operating revenue per mile, excluding fuel surcharges. During the quarter ended June 30, 2018, Universal moved 61,732 dedicated services loads, compared to 52,310 loads one year earlier, and the average rate per mile, excluding fuel surcharges increased 2.6%. Universal’s average dedicated operating revenue per load, excluding fuel surcharges, decreased 8.0%, primarily driven by a decrease in the average length of haul.

Revenues from value-added services increased $6.6 million to $107.2 million in the quarter ended June 30, 2018. This compares to $100.6 million from value-added services one year earlier. Operations supporting heavy-truck accounted for $5.3 million of the increase in value-added services in the second quarter 2018. Overall, revenues from value-added services grew by 6.6% compared to the same period last year.

Consolidated income from operations increased $19.9 million to $26.3 million, compared to $6.4 million one year earlier. Both Universal’s transportation and logistics segments outperformed the same period last year. Income from operations in the transportation segment, which is primarily comprised of truckload, brokerage and intermodal services operations, increased 21.0% to $10.3 million in the quarter ended June 30, 2018. In the logistics segment, which includes value-added and dedicated services, operating income increased $17.5 million to $15.0 million in the second quarter 2018. This compares to an operating loss of $2.5 million in second quarter of 2017, which included approximately $8.0 million of losses in our Mexican value-added operations.

The effective tax rate for the second quarter 2018 was 25.2%, and reflects the estimated impact of the Tax Cuts and Jobs Act. This compares to an effective tax rate of 37.8% during the same period last year. Net income for the second quarter 2018 also includes $0.2 million of pre-tax holding gains on marketable securities due to changes in fair value recognized in income.

During the second quarter of 2018, EBITDA, a non-GAAP measure, increased $21.4 million to $39.8 million, compared to $18.4 million in the same period last year. As a percentage of total operating revenues, operating income and EBITDA margins for the second quarter 2018 were 7.2% and 10.9%, respectively. These profitability metrics compare to 2.1% and 6.0%, respectively, in second quarter 2017.

“Team Universal delivered excellent results this quarter,” stated Jeff Rogers, Universal’s Chief Executive Officer. “This is the third consecutive quarter we have reported record breaking revenues, and the second quarter 2018 also boasts Universal’s highest level of operating income in history. We are successfully executing on our profitability targets, while continuing to deliver the highest level of customer service. I can’t thank the Universal team enough for the hard work and dedication it took to get to this point, and I look forward to continued success in the future.”

Universal calculates and reports selected financial metrics for purposes of our lending arrangements and in an effort to isolate and exclude the impact of non-operating expenses related to our corporate development activities. These statistics are described in more detail below in the section captioned “Non-GAAP Financial Measures.”

As of June 30, 2018, Universal held cash and cash equivalents totaling $1.7 million and $12.5 million in marketable securities. Outstanding debt at the end of the second quarter 2018 was $273.4 million and capital expenditures totaled $24.3 million.

Universal Logistics Holdings, Inc. also announced today that its Board of Directors has declared a quarterly cash dividend of $0.105 per share of common stock. The dividend is payable to shareholders of record at the close of business on August 6, 2018 and will be paid on August 16, 2018.

A replay of the conference call will be available beginning two hours after the call through August 31, 2018, by calling (855) 859-2056 (toll free) or +1 (404) 537-3406 (toll) and using conference ID 7840079. The call will also be available on investors.universallogistics.com.

Universal Logistics Holdings, Inc. is a leading asset-light provider of customized transportation and logistics solutions throughout the United States, and in Mexico, Canada and Colombia. We provide our customers with supply chain solutions that can be scaled to meet their changing demands and volumes. We offer our customers a broad array of services across their entire supply chain, including truckload, brokerage, intermodal, dedicated, and value-added services.

Some of the statements contained in this press release might be considered forward-looking statements. These statements identify prospective information. Forward-looking statements can be identified by words such as: “expect,” “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “future,” “likely,” “may,” “should” and similar references to future periods. Forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. These forward-looking statements are subject to a number of factors that may cause actual results to differ materially from the expectations described. Additional information about the factors that may adversely affect these forward-looking statements is contained in the Company’s reports and filings with the Securities and Exchange Commission. The Company assumes 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.

	Thirteen Weeks Ended						Twenty-six Weeks Ended
	June 30,			July 1,			June 30,			July 1,
	2018			2017			2018			2017
Operating revenues:
Truckload services	$	82,657		$	76,744		$	159,849		$	148,234
Brokerage services		92,486			64,714			170,645			122,703
Intermodal services		54,871			38,729			101,480			74,656
Dedicated services		28,708			24,375			56,783			49,271
Value-added services		107,203			100,637			212,281			194,777
Total operating revenues		365,925			305,199			701,038			589,641

Operating expenses:
Purchased transportation and equipment rent		178,252			142,600			340,263			273,827
Direct personnel and related benefits		87,403			81,238			173,359			156,782
Operating supplies and expenses		30,336			31,467			58,428			60,451
Commission expense		9,733			8,237			18,645			15,781
Occupancy expense		7,791			7,666			15,164			15,497
General and administrative		7,618			6,495			15,605			14,453
Insurance and claims		5,294			9,538			10,754			15,396
Depreciation and amortization		13,246			11,541			25,464			21,868
Total operating expenses		339,673			298,782			657,682			574,055
Income from operations		26,252			6,417			43,356			15,586
Interest expense, net		(2,954	)		(2,481	)		(5,507	)		(4,717	)
Other non-operating income		336			464			(59	)		532
Income before income taxes		23,634			4,400			37,790			11,401
Income tax expense		5,965			1,661			9,687			4,344
Net income	$	17,669		$	2,739		$	28,103		$	7,057

Earnings per common share:
Basic	$	0.62		$	0.10		$	0.99		$	0.25
Diluted	$	0.62		$	0.10		$	0.99		$	0.25

Weighted average number of common shares outstanding:
Basic		28,395			28,443			28,391			28,439
Diluted		28,402			28,443			28,398			28,439

Dividends declared per common share:	$	0.105		$	0.070		$	0.210		$	0.140

	June 30, 2018		December 31, 2017
Assets
Cash and cash equivalents	$	1,664	$	1,672
Marketable securities		12,526		15,144
Accounts receivable - net		213,681		171,036
Other current assets		41,260		40,814
Total current assets		269,131		228,666
Property and equipment - net		284,374		267,195
Other long-term assets - net		134,406		114,731
Total assets	$	687,911	$	610,592

Liabilities and shareholders' equity
Current liabilities, excluding current maturities of debt	$	184,463	$	158,200
Debt - net		272,224		247,978
Other long-term liabilities		38,446		35,649
Total liabilities		495,133		441,827
Total shareholders' equity		192,778		168,765
Total liabilities and shareholders' equity	$	687,911	$	610,592

	Thirteen Weeks Ended				Twenty-six Weeks Ended
	June 30,		July 1,		June 30,		July 1,
	2018		2017		2018		2017
Truckload Services:
Number of loads		74,878		80,720		147,844		160,255
Average operating revenue per load, excluding fuel surcharges	$	976	$	866	$	953	$	838
Average operating revenue per mile, excluding fuel surcharges	$	2.85	$	2.46	$	2.76	$	2.41
Average length of haul		342		351		346		347
Average number of tractors		1,792		1,959		1,833		1,944

Brokerage Services:
Number of loads (a)		53,101		48,768		99,099		91,126
Average operating revenue per load (a)	$	1,659	$	1,275	$	1,654	$	1,270
Average length of haul (a)		582		548		576		572

Intermodal Services:
Number of loads		98,468		87,952		192,497		171,505
Average operating revenue per load, excluding fuel surcharges	$	493	$	387	$	466	$	387
Average number of tractors		1,030		924		955		900
Number of depots		14		12		14		12

Dedicated Services:
Number of loads		61,732		52,310		122,221		104,306
Average operating revenue per load, excluding fuel surcharges	$	358	$	389	$	365	$	392
Average operating revenue per mile, excluding fuel surcharges	$	1.96	$	1.91	$	1.97	$	1.96
Average length of haul		183		203		186		200
Average number of tractors		722		812		745		771

	Thirteen Weeks Ended					Twenty-six Weeks Ended
	June 30,		July 1,			June 30,		July 1,
	2018		2017			2018		2017
Value-added Services
Average number of direct employees		3,855		3,931			3,972		4,354
Average number of full-time equivalents		1,513		1,846			1,372		1,666
Number of active programs		49		50			49		50

Operating Revenues by Segment:
Transportation	$	234,157	$	175,032		$	440,265	$	353,428
Logistics		131,397		129,850			260,046		235,585
Other		371		317			727		628
Total	$	365,925	$	305,199		$	701,038	$	589,641

Income from Operations by Segment:
Transportation	$	10,275	$	8,495		$	20,388	$	14,848
Logistics		15,014		(2,525	)		22,447		1,668
Other		963		447			521		(930	)
Total	$	26,252	$	6,417		$	43,356	$	15,586

In addition to providing consolidated financial statements based on generally accepted accounting principles in the United States of America (GAAP), we are providing additional financial measures that are not required by or prepared in accordance with GAAP (non-GAAP). We present EBITDA, a non-GAAP measure, as supplemental measures of our performance. We define EBITDA as net income plus (i) interest expense, net, (ii) income taxes and (iii) depreciation and amortization, or EBITDA. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis.

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, we are presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial measure to the comparable GAAP measure. Set forth below is a reconciliation of net income, the most comparable GAAP measure, to EBITDA for each of the periods indicated:

	Thirteen Weeks Ended						Twenty-six Weeks Ended
	June 30,			July 1,			June 30,			July 1,
	2018			2017			2018			2017
	( in thousands)						( in thousands)
EBITDA
Net income	$	17,669		$	2,739		$	28,103		$	7,057
Income tax expense		5,965			1,661			9,687			4,344
Interest expense, net		2,954			2,481			5,507			4,717
Depreciation and amortization		13,246			11,541			25,464			21,868
EBITDA	$	39,834		$	18,422		$	68,761		$	37,986

EBITDA margin (a)		10.9	%		6.0	%		9.8	%		6.4	%

We present EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

Because of these limitations, EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and EBITDA only supplementally.