What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-10 · 273 added, 241 removed, 660 unchanged (44% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

Current assets:

39 unchanged sentences

Treasury stock, at cost;

4,718,656 shares

4,722,877 and 4,718,656 shares, respectively

Retained earnings

9 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Operating revenues:

29 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Other comprehensive income (loss):

8 unchanged sentences

(In thousands)

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Cash flows from operating activities:

2 unchanged sentences

Noncash lease expense

Gain on marketable equity securities

Gain on disposal of property and equipment

(Gain) loss on marketable equity securities

(Gain) loss on disposal of property and equipment

Amortization of debt issuance costs

54 unchanged sentences

Balances - July 2, 2022

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Stock based compensation

Balances –

October 1, 2022

Balances –

December 31, 2022

8 unchanged sentences

Balances - July 1, 2023

Comprehensive income (loss)

Purchases of treasury stock

Dividends ($ 0.105 per share)

Stock based compensation

Balances –

September 30, 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’

39 unchanged sentences

The following table provides information related to contract balances associated with our contracts with customers (in thousands):

September 30,

Prepaid expenses and other - contract assets

10 unchanged sentences

The following table sets forth market value, cost basis, and unrealized gains on equity securities (in thousands):

September 30,

Unrealized gain

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities (in thousands):

September 30,

Gross unrealized gains

1 unchanged sentence

Net unrealized gains

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(3) Marketable Securities –

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

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Realized gain

3 unchanged sentences

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.

The Company did no t sell marketable equity securities during the thirteen-week or thirty-nine week period October 1, 2022.

During the thirteen-week and thirty-nine week periods ended September 30, 2023, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $ 410,000 and $ 518,000 , respectively, which was reported in other non-operating income (expense) for the period.

During the thirteen-week and thirty-nine week periods ended October 1, 2022, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $( 491,000 ) and $( 399,000 ), respectively, which was reported in other non-operating income (expense) for the period.

(4) Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities are comprised of the following (in thousands):

September 30,

Accrued payroll

3 unchanged sentences

Commissions, other taxes and other

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Debt is comprised of the following (in thousands):

Interest Rates

at July 1, 2023

at September 30, 2023

September 30,

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 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 –

At September 30, 2023, we were in compliance with all covenants under the facility, and $ 378.9 million was available for borrowing on the revolver.

(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 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.

At September 30, 2023, we were in compliance with all covenants under the facility, and $ 5.0 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 and a third party.

6 unchanged sentences

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

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

At September 30, 2023, we were in compliance with all covenants under the facility.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(5) Debt –

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

At September 30, 2023, the maximum available borrowings under the line of credit were $ 5.0 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 $ 85.8 million.

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

At September 30, 2023, the fair value of the swap agreement was an asset of $ 3.7 million.

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

16 unchanged sentences

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(6) Fair Value Measurements and Disclosures –

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):

September 30,

Fair Value Measurement

6 unchanged sentences

Interest rate swap

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(6) Fair Value Measurements and Disclosures –

The valuation techniques used to measure fair value for the items in the tables above are as follows:

13 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 July 1, 2023 is summarized as follows:

The carrying value and estimated fair value of these promissory notes at September 30, 2023 is summarized as follows:

Carrying Value

2 unchanged sentences

We have not elected the fair value option for any of our financial instruments.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

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.

As of September 30, 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.

2 unchanged sentences

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 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.

As of September 30, 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 and twenty-six weeks ended July 1, 2023 and July 2, 2022 (in thousands):

Thirteen Weeks Ended July 1, 2023

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(7) Leases –

The following table summarizes our lease costs for the thirteen weeks and thirty-nine weeks ended September 30, 2023 and October 1, 2022 (in thousands):

Thirteen Weeks Ended September 30, 2023

With Affiliates

5 unchanged sentences

Total lease cost

Thirteen Weeks Ended July 2, 2022

Thirteen Weeks Ended October 1, 2022

With Affiliates

5 unchanged sentences

Total lease cost

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(7) Leases –

Twenty-six Weeks Ended July 1, 2023

Thirty-nine Weeks Ended September 30, 2023

With Affiliates

5 unchanged sentences

Total lease cost

Twenty-six Weeks Ended July 2, 2022

Thirty-nine Weeks Ended October 1, 2022

With Affiliates

5 unchanged sentences

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):

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(7) Leases –

The following table summarizes other lease related information as of and for the thirty-nine week periods ended September 30, 2023 and October 1, 2022 (in thousands):

September 30, 2023

Other information

4 unchanged sentences

Weighted-average discount rate

October 1, 2022

Other information

4 unchanged sentences

Weighted-average discount rate

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):

Future minimum lease payments under these operating leases as of September 30, 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

In the ordinary course of business, companies owned or controlled by our controlling shareholder, Matthew T.

Moroun, provide us with certain supplementary administrative support services, including legal, human resources, tax, and IT infrastructure services.

In the ordinary course of business, companies owned or controlled by our controlling shareholder provide us with certain supplementary administrative support services, including legal, human resources, tax, and IT infrastructure services.

Universal’s audit committee reviews and approves related party transactions.

The cost of these services is based on the actual or estimated utilization of the specific service.

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

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):

Universal also purchases other services from our affiliates.

Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks and thirty-nine weeks ended September 30, 2023 and October 1, 2022, respectively (in thousands):

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

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 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 –

At September 30, 2023 and December 31, 2022, there were $ 16.4 million and $ 16.2 million, respectively, included in each of these accounts for insured claims.

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 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.

At September 30, 2023 and December 31, 2022, amounts due to affiliates were $ 14.9 million and $ 20.6 million, respectively.

During the thirty-nine weeks ended September 30, 2023 and October 1, 2022, we purchased used tractors from an affiliate totaling $ 6.3 million and $ 1.2 million, respectively.

During the thirty-nine weeks ended September 30, 2023, we contracted with an affiliate to provide real property improvements for us totaling $ 1.9 million.

There were no such purchases made during the thirty-nine weeks ended October 1, 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.

1 unchanged sentence

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

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(8) Transactions with Affiliates –

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 twenty-six weeks ended July 1, 2023 and July 2, 2022 (in thousands):

Following is a schedule of services provided to affiliates for the thirteen weeks and thirty-nine weeks ended September 30, 2023 and October 1, 2022 (in thousands):

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contracted transportation services

Facilities and related support

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

At September 30, 2023 and December 31, 2022, amounts due from affiliates were $ 1.9 million and $ 1.0 million, respectively.

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

33 unchanged sentences

Non-vested at January 1, 2023

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.

Balance at September 30, 2023

In the thirty-nine week periods ended September 30, 2023 and October 1, 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 thirty-nine week period ended September 30, 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 thirty-nine week period ended October 1, 2022.

As of September 30, 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 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.

For the thirteen weeks and thirty-nine weeks ended September 30, 2023, there were 24,021 and 26,553 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 thirty-nine weeks ended October 1, 2022, 30,919 and 17,739 weighted average non-vested shares of restricted stock, respectively, were included in the denominator for the calculation of diluted earnings per share.

No shares of non-vested restricted stock were excluded from the calculation of diluted earnings per share due to anti-dilution during the thirteen weeks or thirty-nine weeks ended September 30, 2023 or October 2, 2022.

(11) Dividends

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 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 .

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.

11 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 and twenty-six week periods ended July 1, 2023 and July 2, 2022 (in thousands):

The following tables summarize information about our reportable segments for the thirteen week and thirty-nine week periods ended September 30, 2023 and October 1, 2022 (in thousands):

Operating Revenues

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

3 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

3 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

9 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 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.

At September 30, 2023, approximately 32 % of our employees were subject to collective bargaining agreements that are renegotiated periodically, 17 % of which are subject to contracts that expire in 2023.

(14) Subsequent Events

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 October 26, 2023 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on January 2, 2024 to shareholders of record at the close of business on December 4, 2023 .

38 unchanged sentences

Current Economic Conditions

As a leading provider of customized freight transportation and logistics solutions, our business can be impacted to varying degrees by factors beyond our control.

The COVID-19 virus that emerged in 2020 affected economic activity broadly and customer sectors served by our industry.

Labor and equipment shortages continue to present challenges to many transportation-related industries.

Disruptions in supply chains for industrial materials and supplies have impacted some of the end-market activities that create demand for our services, and a significant labor dispute involving one or more of our customers could reduce our revenues and harm our profitability.

We cannot predict how long these dynamics will last, or whether future challenges, if any, will adversely affect our results of operations.

Additionally, economic inflation can have a negative impact on our operating costs, and any economic recession could depress activity levels and adversely affect our results of operations.

A prolonged period of inflationary pressures could cause interest rates, equipment, maintenance, labor and other operating costs to continue to increase.

If the Company is unable to offset rising costs through corresponding customer rate increases, such increases could adversely affect our results of operations.

While operating cash flows may be negatively impacted by inflation-driven cost increases, the Company believes we will be able to finance our near term needs for working capital over the next twelve months, as well as any planned capital expenditures during such period, with cash balances, cash flows from operations, and loans and extensions of credit under our credit facilities and on margin against our marketable securities.

Should the impact of inflation-driven cost increases last longer than anticipated, and/or our cash flow from operations decline more than expected, we may need to obtain additional financing.

The Company’s ability to fund future operating expenses and capital expenditures, as well as its ability to meet future debt service obligations or refinance indebtedness will depend on future operating performance, which will be affected by general economic, financial, and other factors beyond our control.

However, the pricing environment generally becomes more competitive during economic downturns, which may, as it has in the past, affect our ability to obtain price increases from customers both during and following such periods.

Also, an economic recession could depress customer demand for transportation services.

Operating Revenues

1 unchanged sentence

truckload services, brokerage services, intermodal services, dedicated services and value-added services.

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 and twenty-six weeks ended July 1, 2023 and July 2, 2022, presented as a percentage of total operating revenues:

Our truckload, brokerage and intermodal services are associated with individual freight shipments coordinated by our agents and company-managed terminals, while our dedicated and value-added services are provided 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 and thirty-nine weeks ended September 30, 2023 and October 1, 2022, presented as a percentage of total operating revenues:

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

September 30,

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 and twenty-six weeks ended July 1, 2023 and July 2, 2022, presented as a percentage of operating revenues:

Thirteen Weeks Ended September 30, 2023 Compared to Thirteen Weeks Ended October 1, 2022

The following table sets forth items derived from our consolidated statements of income for the thirteen weeks ended September 30, 2023 and October 1, 2022:

Thirteen Weeks Ended

Twenty-six Weeks Ended

September 30,

Percent Change in Dollar Amount

(Dollars in millions)

Operating revenues

10 unchanged sentences

Income from operations

Interest and other non-operating expense, net

Interest income (expense), net

Other non-operating income (expense)

Income before income taxes

Income tax expense

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

Operating revenues .

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 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.

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.

The decrease in operating revenues was primarily due to decreased rates and volumes in our transactional transportation-related services.

Included in operating revenues are separately-identified fuel surcharges of $28.2 million for the thirteen weeks ended September 30, 2023, compared to $46.8 million for the thirteen weeks ended October 1, 2022.

Purchased transportation and equipment rent .

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.

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 49.4% for the second quarter 2023 compared to 60.7% in the same period last year.

Third quarter 2023 transactional transportation-related service revenues decreased 28.0% compared to the third quarter of 2022.

As a percentage of total revenues, transactional transportation services revenue decreased to 50.6% for third quarter 2023 compared to 58.6% in the same period last year.

Direct personnel and related benefits .

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 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.

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.

Trends in direct personnel and benefit costs are generally correlated with changes in operating facilities and headcount requirements and, therefore, fluctuate correspondingly 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 the third quarter 2023 was primarily due to an increase in the number of employee drivers in our California intermodal operations.

While generalizations about the impact of personnel and related benefits costs 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 $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 decreases of $2.5 million in fuel expense on company tractors and $0.9 million in maintenance.

Operating supplies and 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 was a decrease in operating supplies and material costs in operations supporting heavy-truck programs.

Commission expense .

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.

Commission expense decreased due to decreased brokerage revenue in our agency-based truckload business and decreased revenue from our intermodal agents.

Occupancy expense .

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.

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

General and administrative .

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.

General and administrative expense remained consistent for both the third quarter 2023 and 2022.

Insurance and claims .

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.

The increase in insurance and claims expense was primarily due to a decrease in owner operator insurance deductions primarily related to the conversion of drivers in California to employees.

Depreciation and amortization .

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.

The increase in depreciation and amortization expense resulted from an increase in depreciation expense of $4.7 million, which was partially offset by a decrease in amortization expense of $0.4 million.

Interest expense, net .

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

As of September 30, 2023, our outstanding borrowings were $392.0 million compared to $393.7 million at October 1, 2022.

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.

The increase in other non-operating income was primarily the result of a $0.5 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income compared to a $0.5 million loss in third quarter 2022.

Income tax expense .

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

Our effective income tax rate was 25.3% in the third quarter 2023 compared to 25.2% in the third quarter 2022.

The decrease in income taxes is primarily the result of a decrease in taxable income.

Thirty-nine Weeks Ended September 30, 2023 Compared to Thirty-nine Weeks Ended October 1, 2022

The following table sets forth items derived from our consolidated statements of income for the thirty-nine weeks ended September 30, 2023 and October 1, 2022:

Thirty-nine Weeks Ended

September 30,

Percent Change in Dollar Amount

(Dollars in millions)

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.

Operating expenses:

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.

Direct personnel and related benefits

Operating supplies and expenses

Commission expense

Occupancy expense

General and administrative

Insurance and claims

Depreciation and amortization

Total operating expenses

Income from operations

Interest income (expense), net

Other non-operating income (expense)

Income before income taxes

Income tax expense

Operating revenues .

The decrease in operating revenues was primarily due to decreased rates and volumes in our transactional transportation-related services.

Included in operating revenues are separately-identified fuel surcharges of $90.7 million for the thirty-nine weeks ended September 30, 2023, compared to $127.5 million for the thirty-nine weeks ended October 1, 2022.

Results for the thirty-nine weeks ending October 1, 2022 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.

Purchased transportation and equipment rent .

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 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.

For the thirty-nine weeks ended September 30, 2023, transactional transportation-related service revenues decreased 31.5% compared to the prior year period.

As a percentage of total revenues, transactional transportation services revenue decreased to 50.6% for thirty-nine weeks ended September 30, 2023, compared to 60.3% 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.

The increase in the thirty-nine weeks ended September 30, 2023, was primarily due to an increase in the number of employee drivers in our California intermodal operations.

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.

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

The main element driving the change was a decrease of $4.7 million in professional fees.

This was partially offset by a $2.1 million increase in vehicle and other maintenance.

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.

Commission expense decreased due to decreased revenue in our agency-based truckload business and decreased revenue from our intermodal agents.

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.

The increase in occupancy expense 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.

The increase in general and administrative expense was primarily due to an increase in professional fees.

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.

The increase in insurance and claims expense was primarily due to a decrease in owner operator insurance deductions primarily related to the conversion of drivers in California to employees and a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the thirty-nine weeks ended October 1, 2022.

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.

The decrease in depreciation and amortization expense resulted from a $0.1 million decrease in depreciation expense and a $1.1 million decrease in amortization expense.

During the thirty-nine weeks ended October 1, 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.

As of September 30, 2023, our outstanding borrowings were $392.0 million compared to $393.7 million at October 1, 2022.

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.

The increase in other non-operating income was primarily the result of a $0.7 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income compared to a $0.4 million loss during the same period last year.

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.

Our effective income tax rate was 25.3% in the thirty-nine weeks ended September 30, 2023, compared to 25.4% in the same period last year.

The decrease in income taxes is primarily the result of a decrease in taxable income.

Segment Financial Results

We report our financial results in four distinct reportable segments:

contract logistics, intermodal, trucking, and company-managed brokerage, which are based primarily on the services each segment provides.

This presentation reflects the manner in which management evaluates our operating segments, including an evaluation of economic characteristics and applicable aggregation criteria.

The following tables summarize information about our reportable segments for the thirteen week and thirty-nine week periods ended September 30, 2023 and October 1, 2022 (in thousands):

Operating Revenues

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

Company-managed brokerage

Total operating revenues

Income from Operations

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

Company-managed brokerage

Total income from operations

Thirteen Weeks Ended September 30, 2023 Compared to Thirteen Weeks Ended October 1, 2022

In the contract logistics segment, which includes our value-added and dedicated services, third quarter 2023 operating revenues decreased 0.7%.

At the end of the third quarter 2023, we managed 73 value-added programs compared to 63 at the end of the third quarter 2022.

Included in contract logistics segment revenues were $9.1 million in separately identified fuel surcharges from dedicated transportation services, compared to $11.3 million during the same period last year.

Third quarter 2023 income from operations decreased $0.3 million and operating margin, as a percentage of revenue, was 16.9% for both the third quarters 2023 and 2022.

Operating revenues in the intermodal segment decreased 43.9% primarily due to decreases in the average revenue per load, excluding fuel surcharges and in the number of loads hauled.

Included in intermodal segment revenues for the recently completed quarter were $12.7 million in separately identified fuel surcharges, compared to $26.4 million during the same period last year.

Intermodal segment revenues also include other accessorial charges such as detention, demurrage and storage, which totaled $9.9 million during the third quarter 2023, compared to $31.3 million one year earlier.

The average operating revenue per load, excluding fuel surcharges, decreased 24.7% and load volumes fell an additional 11.8% on a year-over-year basis.

As a percentage of revenue, operating margin in the intermodal segment for the third quarter 2023 was (5.0)%, compared to 18.2% one year earlier.

In the trucking segment, third quarter 2023 operating revenues decreased 2.5% primarily due to a decrease in the number of loads hauled, partially offset by an increase in the average operating revenue per load, excluding fuel surcharges.

Third quarter 2023 trucking segment revenues included $28.8 million of brokerage services, compared to $43.1 million during the same period last year.

Also included in our trucking segment revenues were $6.3 million in separately identified fuel surcharges during the third quarter 2023, compared to $9.1 million in fuel surcharges during the same period last year.

On a year-over-year basis, the average operating revenue per load, excluding fuel surcharges, increased 13.3% while load volumes declined 13.1%.

As a percentage of revenue, operating margin in the trucking segment for the third quarter 2023 was 6.8% compared to 4.8% during the same period last year.

Third quarter 2023 operating revenues in the company-managed brokerage segment decreased 30.8% primarily due to decreases in the average operating revenue per load and in the number of loads hauled.

On a year-over-year basis, average operating revenue per load and load volumes in the company-managed brokerage segment decreased 11.1% and 12.3%, respectively.

As a percentage of revenue, operating margin for the third quarter 2023 was (3.8)% compared to 2.7% during the same period last year.

Thirty-nine Weeks Ended September 30, 2023 Compared to Thirty-nine Weeks Ended October 1, 2022

In the contract logistics segment, which includes our value-added and dedicated services, operating revenues increased 1.6%.

At the end of the third quarter 2023, we managed 73 value-added programs compared to 63 at the end of the third quarter 2022.

Included in contract logistics segment revenues for the thirty-nine weeks ended September 30, 2023, were $27.4 million in separately identified fuel surcharges from dedicated transportation services, compared to $31.1 million during the same period last year.

Income from operations increased $7.4 million and operating margin, as a percentage of revenue was 15.2% for the thirty-nine weeks ended September 30, 2023, compared to 14.3% in the same period last year.

Operating revenues in the intermodal segment decreased 38.3% primarily due to decreases in the average revenue per load, excluding fuel surcharges and in the number of loads hauled.

Included in intermodal segment revenues for thirty-nine weeks ended September 30, 2023, were $43.4 million in separately identified fuel surcharges, compared to $69.8 million during the same period last year.

Intermodal segment revenues also include other accessorial charges such as detention, demurrage and storage, which totaled $49.4 million during the thirty-nine weeks ended September 30, 2023, compared to $101.1 million one year earlier.

The average operating revenue per load, excluding fuel surcharges, decreased 19.7% and load volumes fell an additional 18.6% on a year-over-year basis.

As a percentage of revenue, operating margin in the intermodal segment for the thirty-nine weeks ended September 30, 2023, was 0.8%, compared to 15.5% one year earlier.

In the trucking segment, operating revenues decreased 15.0% primarily due to decreases in the average revenue per load, excluding fuel surcharges and in the number of loads hauled.

Trucking segment revenues included $94.2 million of brokerage services, compared to $131.8 million during the same period last year.

Also included in our trucking segment revenues were $19.9 million in separately identified fuel surcharges during the thirty-nine weeks ended September 30, 2023, compared to $26.5 million in fuel surcharges during the same period last year.

On a year-over-year basis, the average operating revenue per load, excluding fuel surcharges, decreased 2.2% while load volumes declined 12.9%.

As a percentage of revenue, operating margin in the trucking segment for the thirty-nine weeks ended September 30, 2023, was 5.7% compared to 7.2% during the same period last year.

Operating revenues in the company-managed brokerage segment decreased 43.1% primarily due to decreases in the average operating revenue per load and in the number of loads hauled.

On a year-over-year basis, average operating revenue per load and load volumes in the company-managed brokerage segment decreased 18.7% and 17.7%, respectively.

As a percentage of revenue, operating margin for the thirty-nine weeks ended September 30, 2023, was (2.4)% compared to 5.7% during the same period last year.

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 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.

During the thirty-nine weeks ended September 30, 2023, our capital expenditures totaled $192.1 million.

These expenditures primarily consisted of transportation equipment, investments in support of our value-added service operations, and the expansion of our terminal network including the $80.0 million purchase of a terminal in Compton, Los Angeles County, California.

Our flexible business model depends somewhat on the customized solutions we implement for specific customers.

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 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.

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 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.

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 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.

On October 26, 2023, our Board of Directors declared the regular quarterly cash dividend of $0.105 per share of common stock payable on January 2, 2024 to shareholders of record at the close of business on December 4, 2023.

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

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

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

At September 30, 2023, we were in compliance with all its covenants, and $378.9 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.

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

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.

At September 30, 2023, we were in compliance with all its covenants, and $5.0 million was available for borrowing.

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

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

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

At September 30, 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”).

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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 July 1, 2023, and the maximum available borrowings were $5.2 million.

We did not have any amounts advanced against the line as of September 30, 2023, and the maximum available borrowings were $5.0 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 July 1, 2023, we had cash and cash equivalents of $65.0 million compared to $47.2 million at December 31, 2022.

At September 30, 2023, we had cash and cash equivalents of $16.8 million compared to $47.2 million at December 31, 2022.

Operating activities provided $161.2 million in net cash, and we used $188.6 million in investing activities and $0.3 million in financing activities.

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Net cash provided by operating activities also reflects an aggregate decrease in net working capital totaling $6.8 million.

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 primary drivers behind the decrease in working capital was a decrease in trade and other accounts receivables, and increases in accrued expenses and other current liabilities and income taxes payable.

Affiliate transactions decreased net cash provided by operating activities by $6.7 million.

The decrease resulted from a $5.8 million decrease in accounts payable to affiliates and a $0.9 million increase in accounts receivable from affiliates.

The $188.6 million in net cash used in investing activities consisted of $192.1 million in capital expenditures, which was partially offset by $3.3 million in proceeds from the sale of equipment and $0.2 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.

During the period, we also paid cash dividends of $5.5 million.

We used $0.3 million in financing activities during the thirty-nine weeks ended September 30, 2023.

During the period, we paid cash dividends of $8.3 million, $0.9 million in capitalized financing costs and $0.1 million for purchases of common stock.

We had outstanding borrowings totaling $392.0 million at September 30, 2023 compared to $382.9 million at December 31, 2022.

During the period, we made payments on term loan and equipment and real estate notes totaling $56.0 million, borrowed $39.0 million for new equipment and had net borrowings on our revolving lines of credit totaling $26.1 million.

Off Balance Sheet Arrangements

Critical Accounting Policies

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 July 1, 2023.

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 September 30, 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.

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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 July 1, 2023.

There have not been any material changes to the Company’s market risk during the thirteen weeks ended September 30, 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