Universal Logistics Reports Weaker Q1 Amid Softening Market
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Universal Logistics Holdings experienced a year-over-year decline in revenue and earnings during the first quarter of 2023, the company reported April 27.
The Warren, Mich.-based asset-light transportation and logistics company posted net income of $24.9 million, or 95 cents per diluted share, for the three months ending March 31. That compared with $42 million, $1.56, during the year-ago period. Total operating revenue decreased by 16.5% to $437.4 million from $523.9 million.
“Given an extremely challenging transportation backdrop, I am encouraged by the solid operating results Universal reported in the first quarter of 2023,” CEO Tim Phillips said in a statement. “Our diversification strategy is increasingly evident during a transportation down-cycle as our contract logistics segment was the cornerstone of Universal’s financial performance in the first quarter.”
Despite the declines, the results surpassed expectations by investment analysts on Wall Street, which had been looking for 89 cents per share and quarterly revenue of $416.8 million, according to Zacks Consensus Estimate.
“We continue to experience robust demand in our contract logistics segment, particularly in support of North American automotive production, and we anticipate firm demand through the remainder of the year,” Phillips said. “Our intermodal, trucking and company-managed brokerage segments experienced broad declines as weak import volumes, elevated inventory levels and excess capacity contributed to downward pressure on freight volumes and rates. While there are clearly headwinds in the transportation space, we believe our business model is sound, and we are well positioned when a recovery in the freight cycle begins.”
Universal noted in the earnings report that its Q1 results were negatively impacted by a $1.2 million pre-tax charge for settlement of an auto liability claim in excess of policy limit.
Operating revenue for the quarter in the company’s trucking segment decreased 18.2% to $79.7 million from $97.5 million the prior year. Segment revenue included $34.7 million of brokerage services, compared to $42 million last year, as well as $7.2 million in separately identified fuel surcharges, compared to $7.5 million a year ago. Average operating revenue per load decreased 8.8% year-over-year, and load volumes declined 11.8%. Income from operations decreased 48.6% to $3.8 million from $7.4 million.
The contract logistics segment saw Q1 revenue increase 4.8% to $211.3 million from $201.6 million the prior year. The segment includes value-added and dedicated services. The company was managing 65 value-added programs by the end of the quarter, compared to 63 during the year-ago period, it said. Income from operations in the segment increased 18.3% to $27.8 million from $23.5 million during the same period last year.
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The intermodal segment saw Q1 revenue decrease 29.6% to $111 million from $157.6 million last year. Average operating revenue per load decreased 18.7% and load volumes fell an additional 20.7% year-over-year. Segment revenue included accessorial charges such as detention, demurrage and storage totaling $26 million, compared to $36.2 million one year earlier. Income from operations decreased 70.4% to $6.8 million from $23 million.
The company-managed brokerage segment saw revenue drop 47.9% to $34 million compared with $65.2 million last year. Average operating revenue per load decreased 22.1% year-over-year while load volumes decreased 18.9%. The segment experienced an operating loss of $400,000.