Universal Logistics Holdings Reports First Loss Since Going Public in 2006
One week after Universal Logistics Holdings Inc. warned investors to expect a sizable hit to earnings due to a court case, the carrier announced a net loss for the first time since becoming a publicly traded company in late 2006.
Universal lost $3.3 million in the third quarter, or a negative 12 cents per share, compared with a $5 million profit or 18 cents a year ago. Prior to the dire warning in mid-October, company executives expected earnings to range between 22 and 25 cents, until their hopes were dashed after a jury awarded the plaintiffs $54.2 million in Denton v. Universal Am-Can, Ltd, et al.
“The driver was braking on the expressway in order to avoid another vehicle being driven the wrong way on the interstate. The truck attempted to avoid the oncoming vehicle and the plaintiff’s vehicle and, in so doing, struck the plaintiff’s vehicle,” the company explained in a filing.
Although victims James and Theresa Denton recovered from their injuries, the jury determined that the company and other co-defendants were jointly responsible for $19.2 million in compensatory damages. It also slapped Universal with $35 million in punitive damages, substantially more than the $2.6 million the carrier withheld on its financials above and beyond its $1 million insurance policy limit.
Universal recorded a $17 million pre-tax charge on the financial statements to cover the judgment. The liability lowered earnings 38 cents per share. Excluding the costs of the judgment, earnings per share would’ve been 26 cents, higher than the original 22 to 25 cent estimate.
On a positive note, revenue beat 2016 totals in every division except for dedicated services. Overall revenue climbed 15% to $313 million, beating the Bloomberg News consensus forecast of $303 million.
“I am extremely proud of our results this quarter,” said Universal CEO Jeff Rogers. “Despite some unfavorable developments in a personal injury lawsuit, our operating folks are doing a great job. We exceeded even our own expectations on revenues and results. The outlook across almost all of our end markets is strong, particularly in support of North American Class 8 production. With tightening capacity fueling our transportation growth, and improving results in our logistics group, I am confident we are well-positioned for the remainder of 2017 and beyond.”
Universal ranks No. 32 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 36 on the Transport Topics Top 50 list of the largest logistics companies in North America.
Truckload revenue also jumped 15% to $82.8 million, even though total loads slipped 1.6% to 78,965 and average length of haul only ticked up two miles per trip. The division beat the results from last year due to an 11% increase in revenue per load to $898.
The freight brokerage division flourished in the third quarter with revenue soaring 26% to $73.3 million. Loads rose 14% to 48,870 and average revenue per load went up $135 from last year to $1,392.
Intermodal revenue increased 7.4% to $39.1 million, loads went up 2.7% to 87,342 and revenue per load improved $14 to $402.
Universal’s third-party logistics division — the largest revenue generator — saw sales jump 20% to $95.7 million.
Dedicated services revenue dipped 12% to $22.1 million, the sole detractor on the top line. Dedicated loads contracted 20% to 44,069 and revenue per mile, excluding fuel surcharges, declined 8 cents to $1.96.
