Universal Logistics surpasses the first quarter, raising expectations for 2022

Multimodal transportation and logistics provider Universal Logistics Holdings reported record quarterly results in the first quarter of 2022. The company raised its forecast for 2022 and issued recommendations for the second quarter earlier than the consensus estimate.

Universal (NASDAQ: ULH) reported earnings per share of $ 1.56 after the market closed on Thursday. The figure was almost twice as high as a year ago, and was ahead of its estimated targets in the high 80 cents range.

“Our efforts to assess the structure of operating costs and negotiate tariff increases with our customers, as well as further streamline the business, which does not work in all areas of service, paid off in the first quarter,” said CEO Tim Phillips in a press release. .

Consolidated revenue increased 26% year-over-year to $ 524 million, much better than the estimated 6% growth rate. Intermodal (+ 52%) and contract logistics companies (+ 30%) are in the lead, while trucking (+ 3%) and brokerage companies run by the company (+ 7%) have received more moderate growth. Higher revenue from fuel collection was a windfall.

Purchased vehicles, Universal’s largest cost line, remained higher, but higher prices lowered the line by 130 basis points as a percentage of revenue. As for third-party capacity spending, Phillips told analysts at Friday’s conference: “What you see now is what you’re going to get in the second quarter and beyond.”

He believes that the company has the payment of drivers at a level appropriate to meet the obligations of capacity to customers. He expects Universal to be able to add drivers in the coming months.

“Although the potential owner-operator remains limited, we believe there will be an opportunity to capture owners who may have moved to their own power and may be nervous about the spot market softening,” Phillips said. He believes Universal can also attract small transportation companies to its agent model.

The contract logistics segment benefited from three additional value-added programs during this period. Revenues from specialized transportation in the division increased by 57% due to a similar increase in revenue per shipment, which was the result of “revaluation of existing contracts with customers.”

Intermodal loads decreased by 14% compared to the same period last year, but revenue per shipment increased by 51%. The increase in profitability led to an increase in operating margin by 640 bp. to 14.6%. The congestion of the railway network continues to hamper volumes, but management does not see increased additional fees (detention, downtime and storage), which were three times higher than this period and amounted to $ 36 million, which will soon disappear.

“I think customers are very careful knowing that we have a little lull now and we know we have a lot of cargo overload. If China opens up, it should probably push our way, ”Phillips said.

The trucking division remains ongoing as Universal selects less productive businesses. Compared to the same period last year, the number of tractors decreased by an average of more than 300 units to 1,000. The load on the tractor decreased by 8%. However, the profit from one loading without fuel increased by 41%, and the duration of transportation increased by only 8%. Higher yields pushed the segment’s operating margin by 210 bp. to 7.6%.

Prospects are raised again, instructions may be conservative

Revenue information for 2022 was increased by 8% in the middle of the new range from $ 1.9 billion to $ 2.1 billion. The new leadership was ahead of the consensus estimate of $ 1.85 billion at the time of printing, up 14% from the same period last year. The upper value of the consolidated operating margin was increased by 100 bps to a range of 8% to 10%.

The full-year forecast assumes earnings per share for 2022 north of $ 4.50 in mid-range, excluding the impact of non-operating income and changes in the valuation of commodity securities. This is compared to the consensus estimate of $ 3.32 and earnings per share for the entire 2021 year of $ 2.74. Leadership can be conservative as it offers a consistent 20% decline in each of the next three quarters.

Revenue in the second quarter was projected to range from $ 525 million to $ 550 million, up 27% from the same period last year. The operating margin for the quarter is expected to be between 8% and 10%, meaning earnings per share above $ 1.20 compared to the consensus of 76 cents.

Universal ended the quarter with $ 24 million in cash and commodity securities and $ 403 million in debt. Net interest indebtedness to profit 12 months before interest, taxes, depreciation and amortization was slightly less than 2 times.

ULH shares rose 9% on the last day of trading on Friday, while the S&P 500 fell 0.3%.

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See: Transportation M&A

The FREIGHTWAVES TOP 500 In the list of carriers for hire Universal logistics (No. 23).