What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 300 added, 149 removed, 601 unchanged (43% of the section changed)

56 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Operating revenues:

18 unchanged sentences

Interest expense

Other non-operating income

Other non-operating income (expense)

Income before income taxes

8 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Other comprehensive income (loss):

Unrealized changes in fair value of interest rate swaps, net of income taxes of

$( 277 ) and $ 82 , respectively

Unrealized changes in fair value of interest rate swaps,

net of income taxes of $ 367 , $( 215 ), $ 90 and $( 133 ), respectively

Foreign currency translation adjustments

5 unchanged sentences

(In thousands)

Thirteen Weeks Ended

Twenty-six Weeks Ended

Cash flows from operating activities:

2 unchanged sentences

Noncash lease expense

Loss (gain) on marketable equity securities

Gain on marketable equity securities

Gain on disposal of property and equipment

Amortization of debt issuance costs

Write-off of debt issuance costs

Stock-based compensation

13 unchanged sentences

Proceeds from the sale of property and equipment

Proceeds from the sale of marketable securities

Purchases of marketable securities

Net cash used in investing activities

5 unchanged sentences

Dividends paid

Capitalized financing costs

Purchases of treasury stock

23 unchanged sentences

April 2, 2022

Comprehensive income (loss)

Purchases of treasury stock

Dividends ($ 0.105 per share)

Balances - July 2, 2022

Balances –

5 unchanged sentences

April 1, 2023

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Stock based compensation

Balances - July 1, 2023

See accompanying notes to consolidated financial statements.

16 unchanged sentences

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 July 1, 2023.

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 2022, the Company made a change in an accounting estimate to revise the estimated useful life and salvage values of certain equipment.

The change resulted in additional depreciation expense of $ 9.7 million recorded during the quarter ended July 2, 2022 ($ 7.2 million net of tax, or $ 0.27 per basic and diluted share).

Current Economic Conditions

2 unchanged sentences

Prolonged periods of inflation could cause interest rates, equipment, maintenance, labor and other operating costs to continue to increase.

(2) Recent Accounting Pronouncements

On January 1, 2023, the Company adopted ASU 2016-13, Accounting for Credit Losses (Topic 326).

The ASU requires the use of an “expected loss”

model on certain types of financial instruments.

The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities.

The adoption of this standard did not have a material impact on our consolidated financial statements.

(2) Revenue Recognition

48 unchanged sentences

Net unrealized gains

The Company did no t sell marketable equity securities during either of the thirteen-week week periods ended April 1, 2023 or April 2, 2022.

During the thirteen-week week periods ended April 1, 2023 and April 2, 2022, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $( 13,000 ) and $ 949,000 , respectively, which was reported in other non-operating income (expense) for the period.

The following table shows the Company's net realized gains (losses) on marketable equity securities (in thousands):

Thirteen Weeks Ended

Twenty-six Weeks Ended

Realized gain

Sale proceeds

Cost basis of securities sold

Realized gain

Realized gain, net of taxes

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(3) Marketable Securities –

The Company did no t sell marketable equity securities during the thirteen-week or twenty-six week period July 2, 2022.

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 $ 121,000 and $ 108,000 , respectively, which was reported in other non-operating income (expense) for the period.

During the thirteen-week and twenty-six week periods ended July 2, 2022, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $( 857,000 ) and $ 92,000 , respectively, which was reported in other non-operating income (expense) for the period.

(4) Accrued Expenses and Other Current Liabilities

7 unchanged sentences

Interest Rates

at April 1, 2023

at July 1, 2023

Outstanding Debt:

13 unchanged sentences

The Revolving Credit Facility includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions.

At April 1, 2023, we were in compliance with all covenants under the facility, and $ 400.0 million was available for borrowing on the revolver.

At July 1, 2023, we were in compliance with all covenants under the facility, and $ 400.0 million was available for borrowing on the revolver.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(5) Debt –

(2) Our UACL Credit and Security Agreement (the “UACL Credit Agreement”) provides for maximum borrowings of $ 90 million in the form of an $ 80.0 million term loan and a $ 10.0 million revolver.

6 unchanged sentences

The UACL Credit Agreement includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions.

At April 1, 2023, we were in compliance with all covenants under the facility, and $ 10.0 million was available for borrowing on the revolver.

(3) Our Equipment Financing consists of a series of promissory notes issued by a wholly owned subsidiary.

At July 1, 2023, $ 10.0 million was available for borrowing on the revolver, and the borrowers were in compliance with all covenants under the facility, provided that compliance with the fixed charge coverage ratio required application of a $ 2 million equity cure by Universal Logistics Holdings, Inc.

as permitted by the agreement.

After giving effect to application of net cash proceeds comprising the cure amount and recalculation of the financial covenant, the borrowers were in compliance with the fixed charge coverage ratio at July 1, 2023.

(3) Our Equipment Financing consists of a series of promissory notes issued by a wholly owned subsidiary and a third party.

The equipment notes, which are secured by liens on specific titled vehicles, are generally payable in 60 monthly installments and bear interest at fixed rates ranging from 2.25 % to 7.27 %.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(6) Debt –

(4) Our Real Estate Facility provides for a $ 165.4 million term loan, the full amount of which was advanced on April 29, 2022.

4 unchanged sentences

The facility bears interest at Term SOFR , plus an applicable margin equal to 2.12 %.

At April 1, 2023, we were in compliance with all covenants under the facility.

At July 1, 2023, we were in compliance with all covenants under the facility.

(5) Our Margin Facility is a short-term line of credit secured by our portfolio of marketable securities.

1 unchanged sentence

The amount available under the line of credit is based on a percentage of the market value of the underlying securities.

At April 1, 2023, the maximum available borrowings under the line of credit were $ 5.2 million.

At July 1, 2023, the maximum available borrowings under the line of credit were $ 5.2 million.

The Company is also party to an interest rate swap agreement that qualifies for hedge accounting.

2 unchanged sentences

The swap agreement has an effective date of April 29, 2022, a maturity date of April 30, 2027 , and an amortizing notional amount of $ 88.3 million.

At April 1, 2023, the fair value of the swap agreement was an asset of $ 1.8 million.

At July 1, 2023, the fair value of the swap agreement was an asset of $ 3.2 million.

Since the swap agreement qualifies for hedge accounting, the changes in fair value are recorded in other comprehensive income (loss), net of tax.

43 unchanged sentences

We categorize these borrowings as Level 2 in the fair value hierarchy.

The carrying value and estimated fair value of these promissory notes at April 1, 2023 is summarized as follows:

The carrying value and estimated fair value of these promissory notes at July 1, 2023 is summarized as follows:

Carrying Value

4 unchanged sentences

Notes to Unaudited Consolidated Financial Statements - Continued

ASU 2016-02, Leases, requires us to recognize a right-of-use asset and a corresponding lease liability on our balance sheet for most leases classified as operating leases under previous guidance.

As of July 1, 2023, our obligations under operating lease arrangements primarily relate to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment for which we recognize a right-of-use asset and a corresponding lease liability on our balance sheet.

Right-of-use assets represent our right to use an underlying asset over the lease term and lease liabilities represent the obligation to make lease payments resulting from the lease agreement.

We recognize a right-of-use asset and a lease liability on the effective date of a lease agreement.

As of April 1, 2023, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment.

Our lease obligations typically do not include options to purchase the leased property, nor do they contain residual value guarantees or material restrictive covenants.

Options to extend or terminate an agreement are included in the lease term when it becomes reasonably certain the option will be exercised.

As of April 1, 2023, we were not reasonably certain of exercising any renewal or termination options, and as such, no adjustments were made to the right-of-use lease assets or corresponding liabilities.

We did not separate lease and non-lease components of contracts for purposes of determining the right-of use lease asset and corresponding liability.

Variable lease components that do not depend on an index or a rate, and variable nonlease components were also not contemplated in the calculation of the right-of-use asset and corresponding liability.

For facility leases, variable lease costs include the costs of common area maintenance, taxes, and insurance for which we pay the lessors an estimate that is adjusted to actual expense on a quarterly or annual basis depending on the underlying contract terms.

For equipment leases, variable lease costs may include additional fees associated with using equipment in excess of estimated amounts.

As of July 1, 2023, we were not reasonably certain of exercising any renewal or termination options, and as such, no adjustments were made to the right-of-use lease assets or corresponding liabilities.

Leases with an initial term of 12 months or less, short-term leases, are not recorded on the balance sheet.

Lease expense for short-term and long-term operating leases is recognized on a straight-line basis over the lease term.

The following table summarizes our lease costs for the thirteen weeks ended April 1, 2023 and April 2, 2022 (in thousands):

Thirteen Weeks Ended April 1, 2023

The following table summarizes our lease costs for the thirteen weeks and twenty-six weeks ended July 1, 2023 and July 2, 2022 (in thousands):

Thirteen Weeks Ended July 1, 2023

With Affiliates

5 unchanged sentences

Total lease cost

Thirteen Weeks Ended April 2, 2022

Thirteen Weeks Ended July 2, 2022

With Affiliates

8 unchanged sentences

(7) Leases –

The following table summarizes other lease related information as of and for the thirteen week periods ended April 1, 2023 and April 2, 2022 (in thousands):

April 1, 2023

Twenty-six Weeks Ended July 1, 2023

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

Twenty-six Weeks Ended July 2, 2022

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

The following table summarizes other lease related information as of and for the twenty-six week periods ended July 1, 2023 and July 2, 2022 (in thousands):

Other information

4 unchanged sentences

Weighted-average discount rate

April 2, 2022

Other information

1 unchanged sentence

Right-of-use assets obtained in exchange for new operating lease liabilities

Right-of-use asset change due to lease termination

Right-of-use assets change due to lease termination

Weighted-average remaining lease term (in years)

Weighted-average discount rate

Future minimum lease payments under these operating leases as of April 1, 2023, are as follows (in thousands):

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(7) Leases –

Future minimum lease payments under these operating leases as of July 1, 2023, are as follows (in thousands):

With Affiliates

4 unchanged sentences

Present value of lease liabilities

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(8) Transactions with Affiliates

4 unchanged sentences

Universal also purchases other services from companies owned or controlled by our controlling shareholder.

Following is a schedule of cost incurred and included in operating expenses for services provided by affiliates for the thirteen weeks ended April 1, 2023 and April 2, 2022 (in thousands):

Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks and twenty-six weeks ended July 1, 2023 and July 2, 2022, respectively (in thousands):

Thirteen Weeks Ended

Twenty-six Weeks Ended

Real estate rent and related costs

13 unchanged sentences

In our Consolidated Balance Sheets, we record our insured claims liability and the related recovery in insurance and claims, and other receivables.

At April 1, 2023 and December 31, 2022, there were $ 18.8 million and $ 16.2 million, respectively, included in each of these accounts for insured claims.

At July 1, 2023 and December 31, 2022, there were $ 17.6 million and $ 16.2 million, respectively, included in each of these accounts for insured claims.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(8) Transactions with Affiliates –

Other services from affiliates, including contracted transportation services, are delivered to us on a per-transaction basis or pursuant to separate contractual arrangements provided in the ordinary course of business.

At April 1, 2023 and December 31, 2022, amounts due to affiliates were $ 17.5 million and $ 20.6 million, respectively.

During the thirteen weeks ended April 1, 2023, we purchased used tractors from an affiliate totaling $ 3.1 million.

There were no such purchases made during the thirteen weeks ended April 2, 2022.

At July 1, 2023 and December 31, 2022, amounts due to affiliates were $ 27.3 million and $ 20.6 million, respectively.

During the twenty-six weeks ended July 1, 2023, we purchased used tractors from an affiliate totaling $ 6.3 million.

There were no such purchases made during the twenty-six weeks ended July 2, 2022.

In June 2022, we executed a real estate contract with an affiliate to acquire a multi-building, office complex located in Warren, Michigan for $ 8.3 million.

The purchase price was established by an independent, third-party appraisal.

During 2022, the Company made an initial deposit of $ 200,000 and paid the balance at closing in the first quarter of 2023.

The Company made an initial deposit of $ 0.2 million in 2022, and paid the balance at closing in the first quarter of 2023.

Services provided by Universal to Affiliates

1 unchanged sentence

Truck fueling and administrative expenses are presented net in operating expense.

Following is a schedule of services provided to affiliates for the thirteen weeks and ended April 1, 2023 and April 2, 2022 (in thousands):

Following is a schedule of services provided to affiliates for the thirteen weeks and twenty-six weeks ended July 1, 2023 and July 2, 2022 (in thousands):

Thirteen Weeks Ended

Twenty-six Weeks Ended

Contracted transportation services

Facilities and related support

At April 1, 2023 and December 31, 2022, amounts due from affiliates were $ 0.9 million and $ 1.0 million, respectively.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

At July 1, 2023 and December 31, 2022, amounts due from affiliates were $ 2.1 million and $ 1.0 million, respectively.

In May 2022, we sold an inactive Mexican subsidiary to an affiliate for approximately $ 0.1 million.

The purchase price was based on the book value of the net assets sold in the transaction, and as such, no gain or loss was recorded.

On May 13, 2022, the Company commenced a “Dutch auction”

tender offer to repurchase up to 100,000 shares of the Company’s outstanding common stock at a price of not greater than $ 28.00 nor less than $ 25.00 per share.

Following the expiration of the tender offer on June 15, 2022 , we accepted 164,189 shares, including 64,189 oversubscribed shares tendered, of our common stock for purchase at $ 28.00 per share, for a total purchase price of approximately $ 4.6 million, excluding fees and expenses related to the offer.

The total number of shares purchased in the tender offer includes 5,000 shares tendered by a director of the Company, Mr.

“Scott”

We paid for the accepted shares with available cash and funds borrowed under our existing line of credit.

(9) Stock Based Compensation

3 unchanged sentences

Grants under the Plan may be made in the form of options, restricted stock awards, restricted stock purchase rights, stock appreciation rights, phantom stock units, restricted stock units or shares of unrestricted common stock.

On March 24, 2023, the Company granted 34,611 shares of restricted stock to certain of its employees, including 9,134 shares to our Chief Executive Officer and 8,441 shares to our Chief Financial Officer.

In May 2023, the Company granted 3,549 shares of common stock to non-employee directors.

These restricted stock awards have a fair value of $ 25.42 per share, based on the closing price of the Company’s stock on the grant date, and vested immediately.

In March 2023, the Company granted 34,611 shares of restricted stock to certain of its employees, including 9,134 shares to our Chief Executive Officer and 8,441 shares to our Chief Financial Officer.

The restricted stock awards have a grant date fair value of $ 27.59 per share, based on the closing price of the Company’s stock.

The shares will vest in four equal installments on each March 15 in 2024, 2025, 2026, and 2027, subject to continued employment with the Company.

On September 9, 2021, the Company granted 2,355 shares of restricted stock to an employee of the Company.

In September 2021, the Company granted 2,355 shares of restricted stock to an employee of the Company.

The restricted stock award has a fair value of $ 20.46 per share, based on the closing price of the Company’s stock on the grant date.

The unvested shares will vest in five equal increments on each August 9 in 2022, 2023, 2024, 2025 and 2026, subject to continued employment with the Company.

On February 5, 2020, the Company granted 5,000 shares of restricted stock to our Chief Financial Officer.

In February 2020, the Company granted 5,000 shares of restricted stock to our Chief Financial Officer.

The restricted stock award has a fair value of $ 17.74 per share, based on the closing price of the Company’s stock on the grant date.

The shares will vest on February 20, 2024, subject to his continued employment with the Company.

On January 10, 2020, the Company granted 60,000 shares of restricted stock to our Chief Executive Officer.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(9) Stock Based Compensation –

In January 2020, the Company granted 60,000 shares of restricted stock to our Chief Executive Officer.

The restricted stock award has a fair value of $ 18.82 per share, based on the closing price of the Company’s stock on the grant date.

5 unchanged sentences

Non-vested at January 1, 2023

Balance at April 1, 2023

In each of the thirteen week periods ended April 1, 2023 and April 2, 2022, the total grant date fair value of vested shares recognized as compensation costs was $ 0.2 million.

As of April 1, 2023, there was approximately $ 2.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

Balance at July 1, 2023

In the twenty-six week periods ended July 1, 2023 and July 2, 2022 , the total grant date fair value of vested shares recognized as compensation costs was $ 0.3 million and $ 0.2 million, respectively.

Included in compensation cost during the twenty-six week period ended July 1, 2023 was approximately $ 0.1 million recognized as a result of the grant of 3,549 shares of stock to non-employee directors.

No non-employee directors compensation costs was recorded during the twenty-six week period ended July 2, 2022.

As of July 1, 2023, there was approximately $ 2.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

That cost is expected to be recognized on a straight-line basis over the remaining vesting period.

3 unchanged sentences

Diluted earnings per common share include dilutive common stock equivalents determined by the treasury stock method.

For the thirteen weeks ended April 1, 2023 and April 2, 2022, there were 33,348 and 629 weighted average non-vested shares of restricted stock, respectively, included in the denominator for the calculation of diluted earnings per share.

For the thirteen weeks ended April 1, 2023 and April 2, 2022, we excluded 0 and 9,230 shares of non-vested restricted stock from the calculation of diluted earnings per share because such shares were anti-dilutive.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

For the thirteen weeks and twenty-six weeks ended July 1, 2023, there were 21,634 and 27,954 weighted average non-vested shares of restricted stock, respectively, included in the denominator for the calculation of diluted earnings per share.

For the thirteen weeks and twenty-six weeks ended July 2, 2022, 14,554 and 8,247 weighted average non-vested shares of restricted stock, respectively, were included in the denominator for the calculation of diluted earnings per share.

In the thirteen weeks and twenty-six weeks ended July 2, 2022, we excluded 0 and 6,875 shares, respectively, of non-vested restricted stock from the calculation of diluted earnings per share because such shares were anti-dilutive.

No such shares were excluded from the calculation of diluted earnings per share during the thirteen weeks or twenty-six weeks ended July 1, 2023.

(11) Dividends

On February 9, 2023 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on April 3, 2023 to shareholders of record at the close of business on March 6, 2023 .

On April 27, 2023 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on July 3, 2023 to shareholders of record at the close of business on June 5, 2023 .

Declaration of future cash dividends is subject to final determination by the Board of Directors each quarter after its review of our financial condition, results of operations, capital requirements, any legal or contractual restrictions on the payment of dividends and other factors the Board of Directors deems relevant.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(12) Segment Reporting

8 unchanged sentences

Separate balance sheets are not prepared by segment, and we do not provide asset information by segment to the chief operating decision maker.

The following tables summarize information about our reportable segments for the thirteen week periods ended April 1, 2023 and April 2, 2022 (in thousands):

The following tables summarize information about our reportable segments for the thirteen week and twenty-six week periods ended July 1, 2023 and July 2, 2022 (in thousands):

Operating Revenues

Thirteen Weeks Ended

Twenty-six Weeks Ended

Contract logistics

3 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Contract logistics

1 unchanged sentence

Total eliminated inter-segment revenues

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(13) Segment Reporting - continued

Income from Operations

Thirteen Weeks Ended

Twenty-six Weeks Ended

Contract logistics

1 unchanged sentence

Total income from operations

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(13) Commitments and Contingencies

4 unchanged sentences

However, if we experience claims that are not covered by our insurance or that exceed our estimated claim reserve, it could increase the volatility of our earnings and have a materially adverse effect on our financial condition, results of operations or cash flows.

At April 1, 2023, approximately 36 % of our employees in the United States, Canada and Colombia, and 80 % of our employees in Mexico, were subject to collective bargaining agreements that are renegotiated periodically, 28 % of which are subject to contracts that expire in 2023.

At July 1, 2023, approximately 32 % of our employees were subject to collective bargaining agreements that are renegotiated periodically, 18 % of which are subject to contracts that expire in 2023.

(14) Subsequent Events

On April 27, 2023 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on July 3, 2023 to shareholders of record at the close of business on June 5, 2023 .

On July 7, 2023, the Company closed on the purchase of a terminal in Compton, Los Angeles County, California.

The purchase price was $ 80.0 million.

The Company previously made a deposit of $ 1.0 million and used a combination of available cash on hand and funds borrowed under its existing line of credit to fund the balance at closing.

On July 27, 2023 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on October 2, 2023 to shareholders of record at the close of business on September 4, 2023 .

47 unchanged sentences

Our truckload, brokerage and intermodal services associated with individual freight shipments coordinated by our agents and company-managed terminals, while our dedicated and value-added services to specific customers on a contractual basis, generally pursuant to contract terms of one year or longer.

The following table sets forth operating revenues resulting from each of these categories for the thirteen weeks ended April 1, 2023 and April 2, 2022, presented as a percentage of total operating revenues:

The following table sets forth operating revenues resulting from each of these categories for the thirteen weeks and twenty-six weeks ended July 1, 2023 and July 2, 2022, presented as a percentage of total operating revenues:

Thirteen Weeks Ended

Twenty-six Weeks Ended

Operating revenues:

6 unchanged sentences

Results of Operations

The following table sets forth items derived from our consolidated statements of income for the thirteen weeks ended April 1, 2023 and April 2, 2022, presented as a percentage of operating revenues:

The following table sets forth items derived from our consolidated statements of income for the thirteen weeks and twenty-six weeks ended July 1, 2023 and July 2, 2022, presented as a percentage of operating revenues:

Thirteen Weeks Ended

Twenty-six Weeks Ended

Operating revenues:

13 unchanged sentences

Income tax expense

Thirteen Weeks Ended April 1, 2023 Compared to Thirteen Weeks Ended April 2, 2022

Thirteen Weeks Ended July 1, 2023 Compared to Thirteen Weeks Ended July 2, 2022

Operating revenues .

Operating revenues for the thirteen weeks ended April 1, 2023 decreased $86.5 million, or 16.5%, to $437.4 million from $523.9 million for the thirteen weeks ended April 2, 2022.

Included in operating revenues are separately-identified fuel surcharges of $33.9 million for the thirteen weeks ended April 1, 2023 compared to $34.6 million for the thirteen weeks ended April 2, 2022.

Consolidated income from operations decreased $19.7 million, or 34.0%, to $38.2 million for the first quarter 2023 compared to $57.8 million during the same period last year.

First quarter 2023 operating results were negatively impacted by a $1.2 million pre-tax charge for settlement of an auto liability claim in excess of policy limits.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $9.7 million, or 4.8%, to $211.3 million in the first quarter 2023 compared to $201.6 million in the previous year.

Income from operations in the contract logistics segment increased $4.3 million, or 18.3%, to $27.8 million for the thirteen weeks ended April 1, 2023 compared to $23.5 million in the same period last year.

In the first quarter of 2023, Universal managed 65 value-added programs compared to 63 in the prior year period.

Included in dedicated transportation revenue for the first quarter 2023 were $9.7 million in separately identified fuel surcharges, compared to $8.8 million in the same period last year.

As a percentage of revenue, operating margin in the contract logistics segment for the first quarter 2023 was 13.1% compared to 11.6% during the same period last year.

In the intermodal segment, operating revenues decreased $46.6 million, or 29.6%, to $111.0 million in the first quarter 2023 compared to $157.6 million in the previous year.

Intermodal revenues for the thirteen weeks ended April 1, 2023 included $17.1 million in separately identified fuel surcharges, compared to $18.2 million in the same period last year.

During the first quarter 2023, Universal moved 122,299 intermodal loads compared to 154,207 in the first quarter 2022, a decrease of 20.7%, while its average operating revenue per load, excluding fuel surcharges decreased 18.7% to $567 from $697.

Intermodal segment revenues also include accessorial charges such as detention, demurrage and storage which totaled $26.0 million during the first quarter 2023, compared to $36.2 million one year earlier.

Income from operations in the intermodal segment decreased $16.2 million to $6.8 million for the thirteen weeks ended April 1, 2023 compared to $23.0 million in the first quarter 2022.

As a percentage of revenue, operating margin in the intermodal segment for the first quarter 2023 was 6.1%, compared to 14.6% during the same period last year.

In the trucking segment, operating revenues decreased $17.8 million, or 18.2%, to $79.7 million in the first quarter 2023 compared to $97.5 million in the prior year period.

Included in trucking segment revenues for the first quarter 2023 were $7.2 million in separately identified fuel surcharges compared to $7.5 million during the first quarter 2022.

Income from operations in the trucking segment decreased $3.6 million to $3.8 million for the first quarter 2023 compared to $7.4 million in the same period last year.

Operating revenues for the thirteen weeks ended July 1, 2023 decreased $114.6 million, or 21.7%, to $412.6 million from $527.2 million for the thirteen weeks ended July 2, 2022.

Included in operating revenues are separately-identified fuel surcharges of $28.6 million for the thirteen weeks ended July 1, 2023 compared to $46.1 million for the thirteen weeks ended July 2, 2022.

Consolidated income from operations decreased $28.3 million, or 43.7%, to $36.4 million for the second quarter 2023 compared to $64.7 million during the same period last year.

Second quarter 2022 results include a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period as well as $9.7 million in additional depreciation expense due to the revision of the useful life and salvage value of certain equipment.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $1.5 million, or 0.7%, to $208.8 million in the second quarter 2023 compared to $207.3 million in the previous year.

Income from operations in the contract logistics segment increased $3.4 million, or 11.4%, to $32.8 million for the thirteen weeks ended July 1, 2023 compared to $29.4 million in the same period last year.

In the second quarter of 2023, Universal managed 68 value-added programs compared to 64 in the prior year period.

Included in dedicated transportation revenue for the second quarter 2023 were $8.6 million in separately identified fuel surcharges, compared to $11.0 million in the same period last year.

As a percentage of revenue, operating margin in the contract logistics segment for the second quarter 2023 was 15.7% compared to 14.2% during the same period last year.

In the intermodal segment, operating revenues decreased $65.3 million, or 41.6%, to $91.6 million in the second quarter 2023 compared to $156.9 million in the previous year.

Intermodal revenues for the thirteen weeks ended July 1, 2023 included $13.6 million in separately identified fuel surcharges, compared to $25.2 million in the same period last year.

During the second quarter 2023, Universal moved 112,925 intermodal loads compared to 145,916 in the second quarter 2022, a decrease of 22.6%, while its average operating revenue per load, excluding fuel surcharges decreased 15.3% to $590 from $696.

Intermodal segment revenues also include accessorial charges such as detention, demurrage and storage, which totaled $13.4 million during the second quarter 2023, compared to $33.6 million one year earlier.

Income from operations in the intermodal segment decreased $21.6 million to a loss of $(0.2) million for the thirteen weeks ended July 1, 2023 compared to operating income of $21.4 million in the second quarter 2022.

As a percentage of revenue, operating margin in the intermodal segment for the second quarter 2023 was (0.3)%, compared to 13.6% during the same period last year.

In the trucking segment, operating revenues decreased $25.3 million, or 23.7%, to $81.2 million in the second quarter 2023 compared to $106.5 million in the prior year period.

Included in trucking segment revenues for the second quarter 2023 were $6.4 million in separately identified fuel surcharges compared to $9.9 million during the second quarter 2022.

Income from operations in the trucking segment decreased $5.2 million to $4.4 million for the second quarter 2023 compared to $9.6 million in the same period last year.

During the recently completed quarter, Universal’s average operating revenue per load, excluding fuel surcharges, decreased 10.7% to $1,646 from $1,844 in the prior year period and load volumes decreased 13.7% to 45,717 from 52,986.

As a percentage of revenue, operating margin in the trucking segment for the first quarter 2023 was 4.8%, compared to 7.6% during the same period last year.

In the company-managed brokerage segment, operating revenues decreased $31.3 million, or 47.9%, to $34.0 million in the thirteen weeks ending April 1, 2023 compared to $65.2 million in the thirteen weeks ending April 2, 2022.

As a percentage of revenue, operating margin in the trucking segment for the second quarter 2023 was 5.4%, compared to 9.0% during the same period last year.

Included in the trucking segment’s second quarter 2022 operating results was a $3.0 million credit related to a previously disclosed item, which favorably impacted this segment’s operating margin by 280 basis points.

In the company-managed brokerage segment, operating revenues decreased $25.5 million, or 46.3%, to $29.6 million in the thirteen weeks ending July 1, 2023 compared to $55.1 million in the thirteen weeks ending July 2, 2022.

During the recently completed quarter, the average operating revenue per load decreased 20.3% to $1,599 from $2,006 and load volumes fell 21.5% to 17,814 from 22,701.

First quarter 2023 results include a $1.2 million charge for the settlement of an auto liability claim.

In the first quarter 2023, the company-managed brokerage segment experienced an operating loss of $(0.4) million compared to operating income of $3.9 million one year earlier.

The first quarter 2023 operating results included a $1.2 million charge for settlement of an auto liability claim in excess of policy limits.

As a percentage of revenue, operating margin for the first quarter 2023 was (1.1)% compared to 5.9% during the same period last year.

The claims charge recorded in the first quarter 2023 adversely impacted the company-managed brokerage segment’s operating margin by 350 basis points.

Second quarter 2023 operating losses in the company-managed brokerage segment were $(0.8) million compared to $4.2 million of operating income during the same period last year.

As a percentage of revenue, operating margin for the company-managed brokerage segment was (2.7)% for the second quarter 2023 compared to 7.5% in the same period last year.

Purchased transportation and equipment rent .

Purchased transportation and equipment rental costs for the first quarter 2023 decreased $76.0 million, or 32.8%, to $156.1 million from $232.1 million during the same period last year.

Purchased transportation and equipment rental costs for the second quarter 2023 decreased $87.3 million, or 38.4%, to $139.9 million from $227.2 million during the same period last year.

Purchased transportation and equipment rent generally increases or decreases in proportion to the revenues generated through owner-operators and other third party providers.

1 unchanged sentence

The absolute decrease in purchased transportation and equipment rental costs was primarily the result of an overall decrease in transactional transportation-related services.

First quarter 2023 transactional transportation-related service revenues decreased 29.8% compared to the first quarter of 2022.

Second quarter 2023 transactional transportation-related service revenues decreased 36.3% compared to the second quarter of 2022.

As a percentage of operating revenues, purchased transportation and equipment rent expense decreased to 33.9% compared to 43.1% during the same period last year due to a decrease in the mix of transactional transportation services revenue.

As a percentage of total revenues, transactional transportation services revenue decreased to 51.7% for first quarter 2023 compared to 61.5% in the same period last year.

As a percentage of total revenues, transactional transportation services revenue decreased to 49.4% for the second quarter 2023 compared to 60.7% in the same period last year.

Direct personnel and related benefits .

Direct personnel and related benefits for the thirteen weeks ended April 1, 2023 increased by $3.1 million, or 2.3%, to $139.8 million compared to $136.7 million during the same period last year.

Direct personnel and related benefits for the thirteen weeks ended July 1, 2023 increased by $11.3 million, or 8.9%, to $138.0 million compared to $126.7 million during the same period last year.

Trends in these expenses are generally correlated with changes in operating facilities and headcount requirements and, therefore, increase and decrease with the level of demand for our staffing needs in our contract logistics segment, which includes value-added services and dedicated transportation, as well as the use of employee drivers in certain of our intermodal operations.

The increase in first quarter 2023 was primarily due to an increase in the number of employee drivers in our California intermodal operations.

As a percentage of operating revenues, personnel and related benefits increased to 32.0% for the thirteen weeks ended April 1, 2023, compared to 26.1% for the thirteen weeks ended April 2, 2022.

The increase in second quarter 2023 was due to an increase in the number of employee drivers in our California intermodal operations.

As a percentage of operating revenues, personnel and related benefits increased to 33.5% for the thirteen weeks ended July 1, 2023, compared to 24.0% for the thirteen weeks ended July 2, 2022.

The percentage is derived on an aggregate basis from both existing and new programs, and from customer operations at various stages in their lifecycles.

2 unchanged sentences

Operating supplies and expenses .

Operating supplies and expenses increased by $4.1 million, or 9.7%, to $46.2 million for the thirteen weeks ended April 1, 2023 compared to $42.1 million for the thirteen weeks ended April 2, 2022.

Operating supplies and expenses decreased by $4.9 million, or 10.7%, to $41.1 million for the thirteen weeks ended July 1, 2023 compared to $46.0 million for the thirteen weeks ended July 2, 2022.

These expenses include items such as fuel, maintenance, cost of materials, communications, utilities and other operating expenses, and generally relate to fluctuations in customer demand.

The main elements driving the change were increases of $2.7 million in maintenance and $1.7 million in fuel expense on company tractors.

The main elements driving the change were decreases of $2.5 million in fuel expense on company tractors and $0.9 million in maintenance.

Commission expense .

Commission expense for the first quarter 2023 decreased by $1.9 million, or 18.5%, to $8.2 million from $10.0 million for the first quarter 2022.

Commission expense decreased due to decreased revenue in our agency-based truckload and intermodal businesses.

As a percentage of operating revenues, commission expense was unchanged at 1.9%.

Commission expense for the second quarter 2023 decreased by $3.1 million, or 28.9%, to $7.6 million from $10.8 million for the second quarter 2022.

Commission expense decreased due to decreased revenue in our agency-based truckload business.

As a percentage of operating revenues, commission expense was 1.9% compared to 2.0% for the second quarter 2022.

Occupancy expense .

Occupancy expenses increased by $1.0 million, or 9.4%, to $11.2 million for the thirteen weeks ended April 1, 2023.

This compares to $10.2 million for the thirteen weeks ended April 2, 2022.

The increase was primarily attributable to an increase in building rents.

Occupancy expenses increased by $1.0 million, or 10.4%, to $11.0 million for the thirteen weeks ended July 1, 2023.

This compares to $10.0 million for the thirteen weeks ended July 2, 2022.

The increase was attributable to an increase in building rents and property taxes.

General and administrative .

General and administrative expense for the thirteen weeks ended April 1, 2023 increased by $1.2 million, or 11.9%, to $11.3 million from $10.1 million in the thirteen weeks ended April 2, 2022.

As a percentage of operating revenues, general and administrative expense was 2.6% for the first quarter 2023 compared to 1.9% for the first quarter 2022.

General and administrative expense for the thirteen weeks ended July 1, 2023 increased by $1.3 million, or 10.6%, to $13.4 million from $12.1 million in the thirteen weeks ended July 2, 2022.

The increase was due to increases of $0.6 million in professional fees and $0.6 million in salaries, wages, and benefits.

As a percentage of operating revenues, general and administrative expense was 3.3% for the second quarter 2023 compared to 2.3% for the second quarter 2022.

Insurance and claims .

Insurance and claims expense for the first quarter 2023 decreased by $0.5 million to $8.1 million from $8.6 million in the first quarter 2022.

As a percentage of operating revenues, insurance and claims increased to 1.8% for the thirteen weeks ending April 1, 2023 compared to 1.6% for the first quarter 2022.

The decrease was attributable to a $2.6 million decrease in cargo and service failure claims.

This was partially offset by an increase in auto liability premiums and contractor insurance as well as a $1.2 million settlement of an auto liability claim in excess of policy limits.

Insurance and claims expense for the second quarter 2023 increased by $3.3 million to $5.9 million from $2.6 million in the second quarter 2022.

As a percentage of operating revenues, insurance and claims increased to 1.4% for the thirteen weeks ending July 1, 2023 compared to 0.5% for the second quarter 2022.

Second quarter 2022 included a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period.

Depreciation and amortization .

Depreciation and amortization expense for the thirteen weeks ended April 1, 2023 increased by $2.3 million, or 14.1%, to $18.5 million from $16.2 million for the first quarter 2022.

Depreciation expense increased $2.7 million and amortization expense decreased $0.4 million.

Depreciation and amortization expense for the thirteen weeks ended July 1, 2023 decreased by $7.9 million, or 29.2%, to $19.2 million from $27.1 million for the second quarter 2022.

Depreciation expense decreased $7.5 million and amortization expense decreased $0.4 million.

During the second quarter of 2022, Universal revised the estimated useful life and salvage value of certain equipment, and these adjustments resulted in additional depreciation expense of $9.7 million during the period.

Interest expense, net .

Net interest expense was $5.0 million for the thirteen weeks ended April 1, 2023 compared to $2.4 million for the thirteen weeks ended April 2, 2022.

Net interest expense was $5.1 million for the thirteen weeks ended July 1, 2023 compared to $3.9 million for the thirteen weeks ended July 2, 2022.

The increase in net interest expense reflects an increase in interest rates on our outstanding borrowings.

As of April 3, 2023, our outstanding borrowings totaled $381.9 million compared to $402.7 million at the same time last year.

Other non-operating income .

Other non-operating income was $15 thousand for the first quarter 2023 compared to $1.0 million in the prior year period.

Other non-operating income for the first quarter 2022 includes a $0.9 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income.

As of July 1, 2023, our outstanding borrowings totaled $382.0 million compared to $417.3 million at the same time last year.

Other non-operating income (expense) .

Other non-operating income was $0.3 million for the second quarter 2023 compared to non-operating expense of $0.8 million in the prior year period.

Other non-operating income for the second quarter 2023 includes a $0.1 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income compared to a $0.9 million pre-tax holding loss in the previous year.

Income tax expense .

Income tax expense for the first quarter 2023 was $8.4 million, compared to $14.4 million for the first quarter 2022, based on an effective tax rate of 25.2% and 25.5% respectively.

The decrease in income taxes in 2023 is the result of a decrease in taxable income and in our effective tax rate for the thirteen weeks ended April 1, 2023 compared to the thirteen weeks ended April 2, 2022.

Income tax expense for the second quarter 2023 was $8.0 million, compared to $15.2 million for the second quarter 2022, based on an effective tax rate of 25.3% and 25.4%, respectively.

The decrease in income taxes in 2023 is the result of a decrease in taxable income and our effective tax rate for the thirteen weeks ended July 1, 2023 compared to the thirteen weeks ended July 2, 2022.

Twenty-six Weeks Ended July 1, 2023 Compared to Twenty-six Weeks Ended July 2, 2022

Operating revenues .

Operating revenues for the twenty-six weeks ended July 1, 2023 decreased $201.1 million, or 19.1%, to $850.0 million from $1,051.0 million for the twenty-six weeks ended July 2, 2022.

Included in operating revenues are separately-identified fuel surcharges of $62.6 million for the twenty-six weeks ended July 1, 2023 compared to $80.7 million for the twenty-six weeks ended July 2, 2022.

Consolidated income from operations decreased $47.9 million, or 39.1%, to $74.6 million for the first half of 2023 compared to $122.5 million during the same period last year.

First half 2023 operating results were negatively impacted by a $1.2 million pre-tax charge for settlement of an auto liability claim in excess of policy limits.

First half 2022 results include a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period as well as $9.7 million in additional depreciation expense due to the revision of the useful life and salvage value of certain equipment.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $11.2 million, or 2.7%, to $420.1 million in the first half of 2023 compared to $408.9 million in the previous year.

Income from operations in the contract logistics segment increased $7.7 million, or 14.5%, to $60.6 million for the twenty-six weeks ended July 1, 2023 compared to $52.9 million in the same period last year.

In the first half of 2023, Universal managed 68 value-added programs compared to 64 in the prior year period.

Included in dedicated transportation revenue for the first half of 2023 were $18.3 million in separately identified fuel surcharges, compared to $19.8 million in the same period last year.

As a percentage of revenue, operating margin in the contract logistics segment for the first half of 2023 was 14.4% compared to 12.9% during the same period last year.

In the intermodal segment, operating revenues decreased $111.9 million, or 35.6%, to $202.6 million in the first half of 2023 compared to $314.5 million in the previous year.

Intermodal revenues for the twenty-six weeks ended July 1, 2023 included $30.7 million in separately identified fuel surcharges, compared to $43.5 million in the same period last year.

During the first half of 2023, Universal moved 235,224 intermodal loads compared to 300,123 in the first half of 2022, a decrease of 21.6%, while its average operating revenue per load, excluding fuel surcharges decreased 17.0% to $578 from $697.

Intermodal segment revenues also include accessorial charges such as detention, demurrage and storage, which totaled $39.4 million during the first half of 2023, compared to $69.8 million one year earlier.

Income from operations in the intermodal segment decreased $37.8 million to $6.6 million for the twenty-six weeks ended July 1, 2023 compared to $44.4 million in the first half of 2022.

As a percentage of revenue, operating margin in the intermodal segment for the first half of 2023 was 3.2%, compared to 14.1% during the same period last year.

In the trucking segment, operating revenues decreased $43.1 million, or 21.1%, to $161.0 million in the first half of 2023 compared to $204.0 million in the prior year period.

Included in trucking segment revenues for the first half of 2023 were $13.5 million in separately identified fuel surcharges compared to $17.5 million during the first half of 2022.

Income from operations in the trucking segment decreased $8.8 million to $8.2 million for the first half of 2023 compared to $17.0 million in the same period last year.

During the first half of 2023, Universal’s average operating revenue per load, excluding fuel surcharges, decreased 9.8% to $1,627 from $1,804 in the prior year period and load volumes decreased 12.8% to 90,572 from 103,846.

As a percentage of revenue, operating margin in the trucking segment for the first half of 2023 was 5.1%, compared to 8.3% during the same period last year.

Included in the trucking segment’s first half 2022 operating results was a $3.0 million credit related to a previously disclosed item, which favorably impacted this segment’s operating margin by 150 basis points.

In the company-managed brokerage segment, operating revenues decreased $56.8 million, or 47.2%, to $63.6 million in the twenty-six weeks ending July 1, 2023 compared to $120.3 million in the twenty-six weeks ending July 2, 2022.

During the first half of 2023, the average operating revenue per load decreased 21.2% to $1,650 from $2,094 and load volumes fell 20.2% to 37,770 from 47,311.

First half 2023 operating losses in the company-managed brokerage segment were $(1.2) million compared to $8.0 million of operating income during the same period last year.

As a percentage of revenue, operating margin for the company-managed brokerage segment was (1.8)% for the first half of 2023 compared to 6.7% in the same period last year.

First half 2023 operating results were negatively impacted by a $1.2 million pre-tax charge for settlement of an auto liability claim in excess of policy limits.

Purchased transportation and equipment rent .

Purchased transportation and equipment rental costs for the first half of 2023 decreased $163.4 million, or 35.6%, to $296.0 million from $459.3 million during the same period last year.

Purchased transportation and equipment rent generally increases or decreases in proportion to the revenues generated through owner-operators and other third party providers.

The increases or decreases are generally correlated with changes in demand for transactional transportation-related services, which includes truckload, brokerage, and intermodal services.

The absolute decrease in purchased transportation and equipment rental costs was primarily the result of an overall decrease in transactional transportation-related services.

First half 2023 transactional transportation-related service revenues decreased 33.1% compared to the first half of 2022.

As a percentage of operating revenues, purchased transportation and equipment rent expense decreased to 34.8% compared to 43.7% during the same period last year due to a decrease in the mix of transactional transportation services revenue.

As a percentage of total revenues, transactional transportation services revenue decreased to 50.6% for the first half of 2023 compared to 61.1% in the same period last year.

Direct personnel and related benefits .

Direct personnel and related benefits for the twenty-six weeks ended July 1, 2023 increased by $14.3 million, or 5.4%, to $277.1 million compared to $262.8 million during the same period last year.

The increase in the first half of 2023 was primarily due to an increase in the number of employee drivers in our California intermodal operations.

As a percentage of operating revenues, personnel and related benefits increased to 32.6% for the twenty-six weeks ended July 1, 2023, compared to 25.0% for the twenty-six weeks ended July 2, 2022.

The percentage is derived on an aggregate basis from both existing and new programs, and from customer operations at various stages in their lifecycles.

Individual operations may be impacted by additional production shifts or by overtime at selected operations.

While generalizations about the impact of personnel and related benefits costs as a percentage of total revenue are difficult, we manage compensation and staffing levels, including the use of contract labor, to maintain target economics based on near-term projections of demand for our services.

Operating supplies and expenses .

Operating supplies and expenses decreased by $0.9 million, or 1.0%, to $87.3 million for the twenty-six weeks ended July 1, 2023 compared to $88.2 million for the twenty-six weeks ended July 2, 2022.

These expenses include items such as fuel, maintenance, cost of materials, communications, utilities and other operating expenses, and generally relate to fluctuations in customer demand.

The main element driving the change were decreases of $4.9 million in professional fees and $0.6 million in permits.

This was partially offset by increases of $1.9 million in maintenance, $1.6 million in operating supplies and material costs in operations supporting heavy-truck programs, and $1.2 million of fewer gains on sales of property and equipment.

Commission expense .

Commission expense for the first half of 2023 decreased by $5.0 million, or 23.9%, to $15.8 million from $20.8 million for the first half of 2022.

Commission expense decreased due to decreased revenue in our agency-based truckload business.

As a percentage of operating revenues, commission expense was 1.9% compared to 2.0% for the first half of 2022.

Occupancy expense .

Occupancy expenses increased by $2.0 million, or 9.9%, to $22.2 million for the twenty-six weeks ended July 1, 2023.

This compares to $20.2 million for the twenty-six weeks ended July 2, 2022.

The increase was attributable to an increase in building rents and property taxes.

General and administrative .

General and administrative expense for the twenty-six weeks ended July 1, 2023 increased by $2.6 million, or 11.3%, to $25.3 million from $22.8 million in the twenty-six weeks ended July 2, 2022.

The change included increases of $0.9 million in professional fees and $0.8 million in salaries, wages, and benefits.

As a percentage of operating revenues, general and administrative expense was 3.0% for the first half of 2023 compared to 2.2% for the first half of 2022.

Insurance and claims .

Insurance and claims expense for the first half of 2023 increased by $2.8 million to $14.0 million from $11.2 million in the first half of 2022.

As a percentage of operating revenues, insurance and claims increased to 1.6% for the twenty-six weeks ending July 1, 2023 compared to 1.1% for the first half of 2022.

First half 2023 included a $1.2 million settlement of an auto liability claim in excess of policy limits.

First half 2022 included a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period.

Depreciation and amortization .

Depreciation and amortization expense for the twenty-six weeks ended July 1, 2023 decreased by $5.6 million, or 13.0%, to $37.7 million from $43.3 million for the first half of 2022.

Depreciation expense decreased $4.8 million and amortization expense decreased $0.8 million.

During the first half of 2022, Universal revised the estimated useful life and salvage value of certain equipment, and these adjustments resulted in additional depreciation expense of $9.7 million during the period.

Interest expense, net .

Net interest expense was $10.1 million for the twenty-six weeks ended July 1, 2023 compared to $6.4 million for the twenty-six weeks ended July 2, 2022.

The increase in net interest expense reflects an increase in interest rates on our outstanding borrowings.

As of July 1, 2023, our outstanding borrowings totaled $382.0 million compared to $417.3 million at the same time last year.

Other non-operating income (expense) .

Other non-operating income was $0.3 million for the first half of 2023 compared to $0.1 million in the prior year period.

Other non-operating income for the first half of 2023 includes a $0.1 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income, unchanged from the prior year period.

Income tax expense .

Income tax expense for the first half of 2023 was $16.4 million, compared to $29.6 million for the first half of 2022, based on an effective tax rate of 25.2% and 25.4%, respectively.

The decrease in income taxes is the result of a decrease in taxable income and our effective tax rate for the twenty-six weeks ended July 1, 2023 compared to the twenty-six weeks ended July 2, 2022.

Liquidity and Capital Resources

7 unchanged sentences

As a result, our capital expenditure requirements are limited in comparison to most large transportation and logistics service providers, which maintain significant properties and sizable fleets of owned tractors and trailers.

During the thirteen weeks ended April 1, 2023, our capital expenditures totaled $31.3 million.

During the twenty-six weeks ended July 1, 2023, our capital expenditures totaled $79.8 million.

These expenditures primarily consisted of transportation equipment and investments in support of our value-added service operations.

1 unchanged sentence

As a result, our capital expenditures will depend on specific new contracts and the overall age and condition of our owned transportation equipment.

Due to shortages, production backlogs, and limited availability of transportation equipment, our expenditures are projected to be somewhat higher than the customary range of 4% to 5% of our operating revenues.

Through the remainder of 2023, exclusive of acquisitions of businesses or strategic real estate, we expect our capital expenditures to be in the range of 7% to 8% of operating revenues.

We expect to make these capital expenditures for the acquisition of transportation equipment, to support our new and existing value-added service operations, and for improvements to our existing terminal yard and container facilities.

As equipment manufacturers identify and implement solutions enabling them to overcome supply-side constraints, we would expect to return to a normalized level of capital expenditures in future periods.

Due to shortages, production backlogs, and limited availability of transportation equipment in recent years, as well as the acquisition of strategic real estate, our expenditures are projected to be somewhat higher than the customary range of 4% to 5% of our operating revenues.

For the full year 2023, exclusive of acquisitions of businesses, we expect our capital expenditures to be in the range of $235 million, consisting of $110 million for capital equipment and $125 million for purchases of strategic real estate.

We expect to make these capital expenditures for the acquisition of transportation equipment, to support our new and existing value-added service operations, to expand our owned terminal network, and for improvements to our existing terminal yard and container facilities.

On July 7, 2023, the Company closed on the purchase of a terminal in Compton, Los Angeles County, California.

The purchase price was $80.0 million.

The Company previously made a deposit of $1.0 million and used a combination of available cash on hand and funds borrowed under its existing line of credit to fund the balance at closing.

We have a cash dividend policy that anticipates a regular dividend of $0.42 per share of common stock, payable in quarterly increments of $0.105 per share of common stock.

1 unchanged sentence

The Board of Directors did not declare a special dividend in the first quarter of 2023.

On April 27, 2023, our Board of Directors did declare the regular quarterly cash dividend of $0.105 per share of common stock payable July 3, 2023 to shareholders of record at the close of business on June 5, 2023.

On July 27, 2023, our Board of Directors did declare the regular quarterly cash dividend of $0.105 per share of common stock payable October 2, 2023 to shareholders of record at the close of business on September 4, 2023.

During the year ended December 31, 2022, we paid a total of $0.42 per common share, or $11.1 million.

Future dividend policy and the payment of dividends, if any, will be determined by the Board of Directors in light of circumstances then existing, including our earnings, financial condition and other factors deemed relevant by the Board of Directors.

We expect that our cash flow from operations, working capital and available borrowings will be sufficient to meet our capital commitments, to fund our operational needs for at least the next twelve months, and to fund mandatory debt repayments.

Based on the availability of borrowings under our credit facilities, against our marketable security portfolio and other financing sources, and assuming the continuation of our current level of profitability, we do not expect that we will experience any liquidity constraints in the foreseeable future.

We continue to evaluate business development opportunities, including potential acquisitions that fit our strategic plans.

We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources.

The availability of financing or equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions.

If such additional borrowing, lease financing, or equity capital is not available at the time we need it, then we may need to borrow more under the Revolving Credit Facility (if not then fully drawn), extend the maturity of then-outstanding debt, or rely on alternative financing arrangements.

There can be no assurance that we will be able to obtain additional debt under our existing financial arrangements to satisfy our ongoing capital requirements.

However, we believe that our existing liquidity and sources of capital are sufficient to support our operations over the next 12 months.

We also continually evaluate business development opportunities, including potential acquisitions that fit our strategic plans.

There can be no assurance that we will identify any opportunities that fit our strategic plans or will be able to execute any such opportunities on terms acceptable to us.

4 unchanged sentences

Our Revolving Credit Facility includes an accordion feature which allows us to increase availability by up to $200 million upon our request.

At April 1, 2023, we were in compliance with all its covenants, and $400.0 million was available for borrowing.

At July 1, 2023, we were in compliance with all its covenants, and $400.0 million was available for borrowing.

Our UACL Credit and Security Agreement (the “UACL Credit Agreement”) provides for maximum borrowings of $90 million in the form of an $80 million term loan and a $10 million revolver at a variable rate of interest based on index-adjusted SOFR or a base rate and matures on September 30, 2027.

1 unchanged sentence

Our UACL Credit Agreement includes an accordion feature which allows us to increase availability by up to $30 million upon our request.

At April 1, 2023, we were in compliance with all its covenants, and $10.0 million was available for borrowing.

At July 1, 2023, $10.0 million was available for borrowing on the revolver, and the borrowers were in compliance with all covenants under the facility, provided that compliance with the fixed charge coverage ratio required application of a $2 million equity cure by Universal Logistics Holdings, Inc.

as permitted by the agreement.

A wholly owned subsidiary issued a series of promissory notes in order to finance transportation equipment (the “Equipment Financing”).

4 unchanged sentences

The facility bears interest at Term SOFR, plus an applicable margin equal to 2.12%.

At April 1, 2023, we were in compliance with all covenants under the facility.

At July 1, 2023, we were in compliance with all covenants under the facility.

We also maintain a short-term line of credit secured by our portfolio of marketable securities (the “Margin Facility”).

1 unchanged sentence

The amount available under the Margin Facility is based on a percentage of the market value of the underlying securities.

We did not have any amounts advanced against the line as of April 1, 2023, and the maximum available borrowings were $5.2 million.

We did not have any amounts advanced against the line as of July 1, 2023, and the maximum available borrowings were $5.2 million.

Any failure to comply with any material provision or covenant of the Revolving Credit Facility, UACL Credit Agreement, Equipment Financing, Real Estate Facility, Margin Facility, or other agreements governing our financing arrangements in the future could have a material adverse effect on our liquidity and operations.

Discussion of Cash Flows

At April 1, 2023, we had cash and cash equivalents of $76.8 million compared to $47.2 million at December 31, 2022.

At July 1, 2023, we had cash and cash equivalents of $65.0 million compared to $47.2 million at December 31, 2022.

Operating activities provided $105.0 million in net cash, and we used $77.2 million in investing activities and $6.4 million in financing activities.

The $64.5 million in net cash provided by operations was primarily attributed to $24.9 million of net income, which reflects non-cash depreciation and amortization, noncash lease expense, losses on marketable equity securities, gains on equipment sales, amortization of debt issuance costs, stock-based compensation, and provisions for credit losses totaling $27.7 million, net.

The $105.0 million in net cash provided by operations was primarily attributed to $48.4 million of net income, which reflects non-cash depreciation and amortization, noncash lease expense, gains on marketable equity securities and equipment sales, amortization of debt issuance costs, stock-based compensation, and provisions for credit losses totaling $56.0 million, net.

Net cash provided by operating activities also reflects an aggregate decrease in net working capital totaling $0.5 million.

The primary drivers behind the decrease in working capital were decreases in trade accounts receivable and in prepaid expenses and other assets, and increases in accrued expenses and other current liabilities, accruals for insurance and claims, and in income taxes payable.

These were partially offset by principal reductions in operating lease liabilities during the period, an increase in other receivables and decreases in trade accounts payable and other long-term liabilities.

Affiliate transactions decreased net cash provided by operating activities by $3.1 million primarily resulting from an decrease in accounts payable to affiliates.

The $29.7 million in net cash used in investing activities consisted of $31.3 million in capital expenditures, which was partially offset by $1.6 million in proceeds from the sale of equipment.

We used $3.7 million in financing activities during the thirteen weeks ended April 1, 2023.

We had outstanding borrowings totaling $381.9 million at April 1, 2023 compared to $382.9 million at December 31, 2022.

The primary drivers behind the decrease in working capital was a decrease in trade and other accounts receivables, and an increase in accruals for insurance and claims.

These were partially offset by principal reductions in operating lease liabilities during the period, an increase in prepaid expenses and other assets, and decreases in trade accounts payable, accrued expenses and other current liabilities, income taxes payable and other long-term liabilities.

Affiliate transactions increased net cash provided by operating activities by $5.5 million.

The increase resulted from a $6.6 million increase in accounts payable to affiliates, partially offset by a $1.1 million increase in accounts receivable from affiliates.

The $77.2 million in net cash used in investing activities consisted of $79.8 million in capital expenditures, which was partially offset by $2.5 million in proceeds from the sale of equipment and $0.1 million in proceeds from the sale of marketable securities.

We used $6.4 million in financing activities during the twenty-six weeks ended July 1, 2023.

We had outstanding borrowings totaling $382.0 million at July 1, 2023 compared to $382.9 million at December 31, 2022.

During the period, we made payments on our term loan and equipment and real estate notes totaling $34.6 million, and we borrowed $33.7 million for new equipment.

3 unchanged sentences

A summary of critical accounting policies is presented in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies," of our Form 10-K for the year ended December 31, 2022.

There have been no changes in our accounting policies during the thirteen weeks ended April 1, 2023.

There have been no changes in our accounting policies during the thirteen weeks ended July 1, 2023.

Generally, demand for our value-added services delivered to existing customers increases during the second calendar quarter of each year as a result of the automotive industry’s spring selling season.

4 unchanged sentences

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have not been any material changes to the Company’s market risk during the thirteen weeks ended April 1, 2023.

There have not been any material changes to the Company’s market risk during the thirteen weeks ended July 1, 2023.

For additional information, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements