Universal Reports Year-Over-Year Growth Amid Weak Market

Universal Logistics recently acquired Parsec, which provides rail terminal management services. (Universal Logistics Holdings)

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Universal Logistics Holdings inched revenue and earnings in the third quarter of 2024, despite the weaker market conditions, the company reported Oct. 24.

The Warren, Mich.-based asset-light transportation and logistics company posted net income of $26.5 million, or $1.01 a diluted share, for the three months ending Sept. 30. That compared with $23 million, 88 cents, during the year-ago period. Total operating revenue increased 1.3% to $426.8 million from $421.3 million.

“Universal’s diverse service offerings continue to set us apart from the competition in the transportation and logistics industry,” Universal CEO Tim Phillips said during a call with investors. “Our comprehensive offering of logistics solution has once again enabled us to achieve exceptional results even during this extended downturn in the transportation sector."

Phillips highlighted that the quarter also brought with it double-digit operating margin and increased earnings per share in addition to the year-over-year revenue growth. He noted, however, that results are still varied across segments.

Universal ranks No. 27 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 43 on the TT Top 100 list of the largest logistics companies.

As a @TransportTopics 2024 For-Hire Carrier, we pride ourselves on delivering not just freight, but top-notch service. Experience the Universal difference with our transportation services, tailored to meet your unique needs. Contact us today: https://t.co/WYxn0nvNkE pic.twitter.com/m9bRK1mqY3 — Universal Logistics (@Drive4Universal) June 28, 2024

“Our contract logistics business continues to deliver outstanding results, consistently achieving double-digit operating margins,” Phillips said. “Our trucking segment has also achieved solid results despite the overall weakness in the truckload market. The strong demand for our specialized heavy-haul wind [energy] business has propelled trucking to its highest operating margin in over two years, and we continue to see strong demand for this offering. Weighing down our results has been the underperformance of our intermodal segment."

Universal is working to address the underperforming parts of the business by removing costs and improving efficiencies. The effort seems to be paying off with the company reporting the intermodal segment experienced a sequential improvement in operating ratio while narrowing losses to just over $1.1 million during the period.

“During the quarter, we also made a difficult decision to close the company-managed brokerage business. Continued underperformance of this segment along with the deeply depressed freight environment made the decision necessary,” Phillips said. “We remain dedicated to making prudent business decisions and executing our strategy to ensure Universal’s long-term success.”

Universal closed out the quarter by announcing its acquisition of rail terminal management services company Parsec. Phillips believes the acquisition will allow the contract logistics segment to penetrate new verticals and grow core logistics service offerings.

“The acquisition will allow us to enter new industries, expand our service offerings in our contract logistics segment, and provide cross-selling opportunities for drayage and other service lines,” Phillips said. “It will also bring our contract logistics segment segment’s annual revenue run rate to over $1.1 billion.”

• Trucking: revenue decreased 10.3% to $87 million from $97.1 million during the same period last year. The report noted that load volumes declined 16.1% year over year for the segment, but the average operating revenue per load increased 9.3%. Income from operations increased 7.6% to $7.1 million from $6.6 million last year.

“Overall, our trucking segment is performing relatively well given the depressed transportation backdrop,” Phillips said. “Trucking segment results were buoyed by the strong results from our specialized heavy-haul wind business. We expect this to continue throughout Q4 2024 as we have a full schedule of wind projects. Our specialized heavy-haul wind business has a long runway that should see growth for years to come.”

• Intermodal: Revenue decreased 11.8% to $77.6 million from $88 million last year. Load volumes declined 13.2% on a year-over-year basis but the average operating revenue per load increased 1.8%. The segment experienced an operating loss of $1.1 million compared with an operating loss of $4.5 million during the same period last year.

• Contract Logistics: Revenue increased 17.8% to $245.2 million from $208.1 million the prior year. The company managed 70 value-added programs during the quarter compared with 73 by the end of Q3 2023. Income from operations increased 29.9% to $45.6 million compared with $35.1 million during the 2023 period. As a percentage of revenue, operating margin in the segment for Q3 2024 was 18.6% compared with 16.9% during the year-earlier period.