UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address, including Zip Code of Principal Executive Offices)
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(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 |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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 August 5, 2024, was
PART I – FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNIVERSAL LOGISTICS HOLDINGS, INC.
Unaudited Consolidated Balance Sheets
(In thousands, except share data)
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June 29, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable – net of allowance for credit losses of $ |
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Contract assets |
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Other receivables |
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Prepaid expenses and other |
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Due from |
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Total current assets |
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Property and equipment – net of accumulated depreciation of $ |
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Operating lease right-of-use asset |
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Goodwill |
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Intangible assets – net of accumulated amortization of $ |
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Contract assets, net of current portion |
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Deferred income taxes |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Current portion of long-term debt |
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Current portion of operating lease liabilities |
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Accrued expenses and other current liabilities |
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Insurance and claims |
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Due to |
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Income taxes payable |
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Total current liabilities |
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Long-term liabilities: |
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Long-term debt, net of current portion |
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Operating lease liabilities, net of current portion |
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Deferred income taxes |
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Other long-term liabilities |
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Total long-term liabilities |
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Shareholders' equity: |
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Common stock, |
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Paid-in capital |
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Treasury stock, at cost; |
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Retained earnings |
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Accumulated other comprehensive (loss): |
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Interest rate swaps, net of income taxes of $ |
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Foreign currency translation adjustments |
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( |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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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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Twenty-six Weeks Ended |
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June 29, |
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July 1, |
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June 29, |
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July 1, |
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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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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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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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Twenty-six Weeks Ended |
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June 29, |
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July 1, |
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June 29, |
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July 1, |
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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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Foreign currency translation adjustments |
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( |
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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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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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Twenty-six Weeks Ended |
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June 29, |
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July 1, |
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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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Gain on marketable equity securities |
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( |
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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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( |
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Due to/from affiliates, net |
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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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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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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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Purchases of treasury stock |
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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) increase in cash |
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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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$ |
( |
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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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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 - July 1, 2023 |
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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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Balances – December 31, 2023 |
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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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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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Retirement 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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Balances – March 30, 2024 |
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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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( |
) |
Stock based compensation |
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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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( |
) |
Balances - June 29, 2024 |
|
$ |
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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.
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 June 29, 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 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 June 29, 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 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. 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.
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.
7
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
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 provide customers with freight brokerage services by utilizing third-party transportation providers to move freight. Brokerage services also include full-service domestic and international freight forwarding and customs brokerage.
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. For the majority of our programs, 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 typically do not include financing components.
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.
8
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
The following table provides information related to contract balances associated with our contracts with customers (in thousands):
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June 29, |
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December 31, |
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Contract assets |
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$ |
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$ |
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Contract assets, net of current portion |
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Total |
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$ |
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$ |
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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 7.
The following table sets forth market value, cost basis, and unrealized gains on equity securities (in thousands):
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June 29, |
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December 31, |
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Fair value |
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$ |
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$ |
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Cost basis |
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Unrealized gain |
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$ |
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$ |
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The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities (in thousands):
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June 29, |
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December 31, |
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Gross unrealized gains |
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$ |
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$ |
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Gross unrealized losses |
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( |
) |
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( |
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Net unrealized gains |
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$ |
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$ |
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The following table shows the Company’s net realized gains and losses on marketable equity securities (in thousands):
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Thirteen Weeks Ended |
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Twenty-six Weeks Ended |
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June 29, |
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July 1, |
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June 29, |
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July 1, |
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Realized gain |
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Sale proceeds |
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$ |
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$ |
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$ |
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$ |
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Cost basis of securities sold |
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Realized gain |
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$ |
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$ |
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$ |
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$ |
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Realized gain, net of taxes |
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$ |
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$ |
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$ |
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$ |
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The Company did
During the thirteen-week and twenty-six week periods ended June 29, 2024, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $(
During the thirteen-week and twenty-six week periods ended July 1, 2023, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $
9
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
Accrued expenses and other current liabilities are comprised of the following (in thousands):
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June 29, |
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December 31, |
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Accrued payroll |
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$ |
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$ |
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Accrued payroll taxes |
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Accrued contract costs |
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Driver escrow liabilities |
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Legal settlements and claims |
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Commissions, other taxes and other |
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Total |
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$ |
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$ |
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Debt is comprised of the following (in thousands):
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Interest Rates |
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June 29, |
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December 31, |
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Outstanding Debt: |
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Revolving Credit Facility (1) (2) |
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$ |
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$ |
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UACL Credit Agreement (2) |
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Term Loan |
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Revolver |
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Equipment Financing (3) |
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Real Estate Facility (4) |
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Margin Facility (5) |
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Unamortized debt issuance costs |
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( |
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( |
) |
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Less current portion of long-term debt |
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Total long-term debt, net of current portion |
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$ |
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$ |
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(1)
(2)
(3)
10
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements - Continued
(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 SOFR 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:
11
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):
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June 29, |
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Level 1 |
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Level 2 |
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Level 3 |
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Fair Value Measurement |
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Assets |
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