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Universal Logistics Holdings Inc. on Feb, 4 reported its highest fourth-quarter earnings on record.
The Warren, Mich.-based asset-light transportation and logistics company posted net income of $16.2 million, or 60 cents per diluted share, on total operating revenue of $386 million in the three months ending Dec. 31, 2020. That is a 59.9% increase compared with a net income of $8.7 million, 32 cents, during Q4 2019 on total operating revenues of $375.9 million.
“I am excited to announce that the fourth quarter of 2020 was Universal’s highest fourth-quarter earnings on record,” CEO Tim Phillips said in a statement. “In the face of so many challenges, I would like to express my sincerest gratitude to the thousands of employees and contractors who have worked so hard to make this year a success.”
Phillips added that the company has a significant amount of opportunities in the new year. He is optimistic automotive and Class 8 truck production will be strong and see potential to capitalize on import volumes, which are forecast to increase.
“We remain razor-focused on execution and achieving operational excellence in each of our service lines,” Phillips said. “This year has proven the agility of our business model and the strength of our people, and I am confident in the prospect of an even more successful year in 2021.”
The results beat what investment analysts on Wall Street were expecting from the company. They had been looking for 47 cents per share and quarterly revenue of $355.7 million, according to Zacks Consensus Estimate.
Universal Logistics reported that for all of 2020 net income was $48.1 million compared with $37.6 million during the previous year. Total operating revenue reached $1.39 billion compared with $1.51 billion.
Universal Logistics Holdings Reports Fourth Quarter 2020 Financial Results; Announces Change in Reportable Segments; Declares Dividend; Announces Participation in Investor Conference#InvestorRelations https://t.co/qnKUaXVMWa pic.twitter.com/MLi48TqeeA— Drive for Universal (@Drive4Universal) February 4, 2021
The company also announced a realignment of its current operating segments into four new reportable segments. The move is to better align with strategic initiatives to grow organically and through acquisitions. The new segments are contract logistics, intermodal, trucking and company-managed brokerage.
The contract logistics segment reported that Q4 revenue increased 10.4% to $133.2 million from $120 million during the prior-year quarter. Income from segment operations was $12 million compared with $7.2 million during the 2019 period.
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Revenue for the intermodal segment decreased 5.8% to $105.9 million from $112.3 million during the same time in 2019. Income from operations during the quarter was $7.8 million compared with $13.4 million during the prior-year quarter. Intermodal revenue included $12.5 million of demurrage charges. The segment revenue also reflects decreases in the number of loads hauled and in the average operating revenue per load.
Trucking segment revenue decreased 10.6% to $80.9 million from $90 million in Q4 2019. Income from operations during the recent quarter was $3.5 million compared with a loss of $2.9 million in the year-earlier period. The report noted that a decrease in the number of loads hauled, which was partially offset by an increase in average operating revenue per load.
The brokerage segment reported that Q4 2020 revenue increased 20.6% to $65.8 million from $53.5 million during the prior-year quarter. Income from segment operations was $227,000 compared with $630,000.
Stifel Financial Corp. said in a report there was higher than expected revenue across most segments. Contract logistics showed improvement as the automotive industry recovered. Robust Class 8 orders during the past few months and heavy-duty truck production means that trend should continue.
“Universal Logistics Holdings has undergone significant transformation over the past few years,” Stifel analyst Bruce Chan wrote. “After successful corporate streamlining and reorganization, margin levels have stabilized and the company has resumed making acquisitions."
The report noted the deal flow has been on the smaller side. Universal eventually wants to diversify its full service logistics business across multiple industries, thus reducing its historical dependence on the auto industry.
“At present, though, the company is still leveraged to industrial America, particularly the automobile and steel industries, and sluggishness in those end markets remain a headwind,” the report said.
Citi Global highlighted the stronger than expected earnings per share and revenue. The global investment bank increased earnings per share estimates by 3% to $3.05 for 2021. The higher estimates are driven by revenue and related trends that appear to be improving faster than expected.
“We believe it is prudent to remain cautious on operating margin improvement as we believe cost headwinds could be greater than expected in 2021,” Citi said in notes provided to Transport Topics. “That said, revenue trends appear to be quickly improving.”
Universal Logistics Holdings ranks No. 27 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It ranks No. 29 on the TT Top 50 list of the largest logistics companies.
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