What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-09 · 194 added, 590 removed, 343 unchanged (70% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

Current assets:

1 unchanged sentence

Marketable securities

Accounts receivable –

net of allowance for credit losses of $ 13,386

Accounts receivable – net of allowance for credit losses of $ 9,803

and $ 11,229 , respectively

Contract assets

Other receivables

2 unchanged sentences

Total current assets

Property and equipment –

net of accumulated depreciation of $ 356,532 and

Property and equipment – net of accumulated depreciation of $ 382,583 and

$ 370,273 , respectively

Operating lease right-of-use asset

Intangible assets –

net of accumulated amortization of $ 131,383 and $ 121,843 , respectively

Intangible assets – net of accumulated amortization of $ 139,312 and $ 134,514 , respectively

Contract assets, net of current portion

Deferred income taxes

Liabilities and Shareholders’

Liabilities and Shareholders’ Equity

Current liabilities:

21 unchanged sentences

Treasury stock, at cost;

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

0 and 4,722,877 shares

Retained earnings

2 unchanged sentences

Foreign currency translation adjustments

Total shareholders’

Total liabilities and shareholders’

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes to consolidated financial statements.

3 unchanged sentences

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Operating revenues:

18 unchanged sentences

Interest expense

Other non-operating income (expense)

Other non-operating income

Income before income taxes

8 unchanged sentences

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Other comprehensive income (loss):

Unrealized changes in fair value of interest rate swaps,

net of income taxes of $ 131 , $ 972 , $ 221 and $ 838 , respectively

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

$ 202 and $( 277 ), respectively

Foreign currency translation adjustments

5 unchanged sentences

(In thousands)

Thirty-nine Weeks Ended

September 30,

Thirteen Weeks Ended

Cash flows from operating activities:

2 unchanged sentences

Noncash lease expense

(Gain) loss on marketable equity securities

(Gain) loss on disposal of property and equipment

Loss (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

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash

Cash and cash equivalents –

beginning of period

Cash and cash equivalents –

end of period

Net increase (decrease) in cash

Cash and cash equivalents – beginning of period

Cash and cash equivalents – end of period

Supplemental cash flow information:

3 unchanged sentences

UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Consolidated Statements of Shareholders’

Unaudited Consolidated Statements of Shareholders’ Equity

(In thousands, except per share data)

1 unchanged sentence

income (loss)

Balances –

December 31, 2021

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Purchases of treasury stock

Stock based compensation

Balances –

April 2, 2022

Comprehensive income (loss)

Purchases of treasury stock

Dividends ($ 0.105 per share)

Balances - July 2, 2022

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Stock based compensation

Balances –

October 1, 2022

Balances –

December 31, 2022

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Stock based compensation

Balances –

April 1, 2023

Balances – December 31, 2022

Comprehensive income (loss)

1 unchanged sentence

Stock based compensation

Balances - July 1, 2023

Balances – April 1, 2023

Balances – December 31, 2023

Comprehensive income (loss)

Purchases of treasury stock

Dividends ($ 0.105 per share)

Stock based compensation

Balances –

September 30, 2023

Retirement of treasury stock

Balances – March 30, 2024

See accompanying notes to consolidated financial statements.

3 unchanged sentences

The accompanying unaudited consolidated financial statements of Universal Logistics Holdings, Inc.

and its wholly-owned subsidiaries (“Universal”) have been prepared by the Company’s management.

In these notes, the terms “us,”

“we,”

“our,”

or the “Company”

refer to Universal and its consolidated subsidiaries.

and its wholly-owned subsidiaries (“Universal”) have been prepared by the Company’s management.

In these notes, the terms “us,” “we,” “our,” or the “Company” refer to Universal and its consolidated subsidiaries.

In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary to present fairly the information required to be set forth therein.

1 unchanged sentence

Certain information and note disclosures normally included in financial statements prepared in accordance with U.S.

generally accepted accounting principles have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, should be read in conjunction with the consolidated financial statements as of December 31, 2022 and 2021 and for each of the years in the three-year period ended December 31, 2022 included in the Company’s Form 10-K filed with the Securities and Exchange Commission.

The preparation of the consolidated financial statements requires the use of management’s estimates.

generally accepted accounting principles have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, should be read in conjunction with the consolidated financial statements as of December 31, 2023 and 2022 and for each of the years in the three-year period ended December 31, 2023 included in the Company’s Form 10-K filed with the Securities and Exchange Commission.

The preparation of the consolidated financial statements requires the use of management’s estimates.

Actual results could differ from those estimates.

Our fiscal year ends on December 31 and consists of four quarters, each with thirteen weeks.

The Company made certain immaterial reclassifications to items in its prior financial statements so that their presentation is consistent with the format in the financial statements for the period ended September 30, 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).

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 January 2024, the Company’s value-added business began performing specialty project development services for certain customers.

Contract assets represent amounts for which the Company has recognized revenue in excess of billings pursuant to the revenue recognition guidance.

As of March 30, 2024 and December 31, 2023, contract assets associated with certain contracts with customers recognized over time are included as contract assets in the Company’s consolidated balance sheets.

Contract assets associated with other contracts with customers were reclassified from prepaid expenses and other on the consolidated balance sheets to contract assets.

During the first quarter of 2024, the Company identified certain triggering events related to a component of the intermodal reporting segment.

In accordance with FASB Accounting Standards Codification (“ASC”) 350 Intangibles—Goodwill and Other and ASC 360 Property, Plant, and Equipment, the Company evaluated certain indefinite and long lived tangible and intangible assets for impairment.

The results of those procedures concluded that no impairments were present.

After performing the evaluation, it was determined that a change in the estimated useful lives of certain definite lived intangible assets was appropriate and was adjusted during the period.

The change resulted in additional amortization expense of $ 2.2 million recorded during the quarter ended March 30, 2024 ($ 1.7 million net of tax, or $ 0.06 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

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

The ASU expands disclosures related to a public entity's reportable segment and requires more enhanced information about significant segment expenses, including in interim periods.

This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, using a retrospective approach.

Early adoption is permitted.

We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740).

The ASU modifies income tax disclosures by requiring greater disaggregation of information in the rate reconciliations and disclosure of income taxes paid disaggregated by jurisdiction.

This ASU is effective for fiscal years beginning after December 31, 2024, using a prospective approach.

Early adoption and retrospective application are permitted.

We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(3) Revenue Recognition

Universal is a holding company that owns subsidiaries engaged in providing customized transportation and logistics services.

For financial reporting, we broadly group the services provided by our consolidated subsidiaries into the following categories:

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

The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers.

The Company broadly groups its services into the following categories:

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

We disaggregate these categories and report our service lines separately on the Consolidated Statements of Income.

13 unchanged sentences

Measurement of revenue in-transit requires the application of significant judgment.

We calculate the estimated percentage of an order’s transit time that is complete at period end, and we apply that percentage of completion to the order’s estimated revenue.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(2) Revenue Recognition - continued

Value-added services, which are typically dedicated to individual customer requirements, include material handling, consolidation, sequencing, sub-assembly, cross-dock services, kitting, repacking, warehousing and returnable container management.

Value-added revenues are substantially driven by the level of demand for outsourced logistics services.

We calculate the estimated percentage of an order’s transit time that is complete at period end, and we apply that percentage of completion to the order’s estimated revenue.

Value-added revenues are substantially driven by the level of demand for outsourced logistics services and speciality project needs.

Major factors that affect value-added service revenue include changes in manufacturing supply chain requirements and production levels in specific industries, particularly the North American automotive and Class 8 heavy-truck industries.

Revenue is recognized as control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to receive in exchange for its services.

We have elected to use the “right to invoice”

practical expedient to recognize revenue, reflecting that a customer obtains the benefit associated with value-added services as they are provided.

For the majority of our programs, we have elected to use the “right to invoice” practical expedient to recognize revenue, reflecting that a customer obtains the benefit associated with value-added services as they are provided.

The contracts in our value-added services businesses are negotiated agreements, which contain both fixed and variable components.

The variability of revenues is driven by volumes and transactions, which are known as of an invoice date.

Value-added service contracts typically have terms that extend beyond one year, and they do not include financing components.

Value-added service contracts typically have terms that extend beyond one year, and they typically do not include financing components.

Beginning in 2024, value-added services also includes specialty project development services for customers.

The specialty project development service is generally accounted for as a single unit of account (i.e., as a single performance obligation).

Revenue is recognized over time as the Company continuously transfers control of the project to the customer.

Because we transfer control of the project over time, we recognize revenue to the extent of our progress towards completion of our performance obligations.

We generally use the cost-to-cost method for these contracts, which measures progress towards completion for each performance obligation based on the ratio of costs incurred to date to the total estimated costs at completion for the applicable performance obligation.

Incurred cost represents work performed, which corresponds with and thereby best represents the transfer of control to the customer.

Revenue, including estimated fees or profits, is recorded proportionately as costs are incurred.

Cost of operations consists of labor, materials, subcontractor costs, and other direct and indirect costs, and we include them in operating supplies and expenses on the consolidated statements of income.

Due to the nature of the work we are required to perform under these types of contracts, estimating total revenue and cost at completion is complex, subject to many variables and requires significant judgment.

Changes to the total estimated contract revenue or cost for a given project, either due to unexpected events or revisions to management’s initial estimates, are recognized in the period in which they are determined.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(3) Revenue Recognition – continued

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

Contract assets

Contract assets, net of current portion

We generally receive payment for performance obligations within 45 days of completion of transportation services and 65 days for completion of value-added services.

Contract assets in the table above generally relate to revenue in-transit at the end of the reporting period.

As it relates to our specialty development project, we will receive payments in 120 equal monthly installments commencing the month following substantial completion of the project.

Contract assets in the table above generally relates to revenue recognized in excess of billings for its specialty development project, as well as revenue in-transit at the end of the reporting period.

(4) Marketable Securities

The Company accounts for its marketable equity securities in accordance with ASC Topic 321 “

Investments- Equity Securities .”

ASC Topic 321 requires companies to measure equity investments at fair value, with changes in fair value recognized in net income.

The Company’s investments in marketable securities consist of equity securities with readily determinable fair values.

The cost basis of securities sold is based on the specific identification method, and interest and dividends on securities are included in non-operating income (expense).

Marketable equity securities are carried at fair value, with gains and losses in fair market value included in the determination of net income.

1 unchanged sentence

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,

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

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

Thirty-nine Weeks Ended

September 30,

Realized gain

Sale proceeds

Cost basis of securities sold

Realized gain

Realized gain, net of taxes

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.

The Company did no t sell marketable equity securities during either of the thirteen-week week periods ended March 30, 2024 or April 1, 2023.

During the thirteen-week week periods ended March 30, 2024 and April 1, 2023, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $ 990,000 and $( 13,000 ), respectively, which was reported in other non-operating income for the period.

(5) Accrued Expenses and Other Current Liabilities

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

September 30,

Accrued payroll

Accrued payroll taxes

Accrued contract costs

Driver escrow liabilities

5 unchanged sentences

Interest Rates

at September 30, 2023

September 30,

at March 30, 2024

Outstanding Debt:

8 unchanged sentences

Total long-term debt, net of current portion

(1) On September 30, 2022, we amended our Revolving Credit Facility by increasing the revolving credit commitment to up to $ 400.0 million.

Borrowings under the Revolving Credit Facility may now be made until maturity on September 30, 2027 , and they bear interest at index-adjusted SOFR or a base rate plus an applicable margin for each based on the Company’s leverage ratio.

The term loan proceeds were advanced on November 27, 2018 , and the Company repaid in full its then outstanding balance on the term loan on April 29, 2022 .

(1) Our Revolving Credit Facility provides us with a revolving credit commitment of up to $ 400 million.

We may borrow under the Revolving Credit Facility until maturity on September 30, 2027 , and this indebtedness bears interest at index-adjusted SOFR, or a base rate, plus an applicable margin based on the Company’s leverage ratio.

The Revolving Credit Facility is secured by a first-priority pledge of the capital stock of applicable subsidiaries, as well as first-priority perfected security interests in cash, deposits, accounts receivable, and selected other assets of the applicable borrowers.

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 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.

Term loan proceeds were advanced on September 30, 2022 and used to repay existing indebtedness under the Revolving Credit Facility.

The term loan matures on September 30, 2027 and will be repaid in consecutive quarterly installments, as defined in the UACL Credit Agreement, commencing December 31, 2022.

At March 30, 2024, we were in compliance with all covenants under the facility, and $ 362.2 million was available for borrowing on the revolver.

(2) Our UACL Credit Agreement provides for maximum borrowings of $ 90 million in the form of an $ 80 million term loan and a $ 10 million revolver.

The term loan matures on September 30, 2027 and is repaid in consecutive quarterly installments.

The remaining term loan balance is due at maturity.

Borrowings under the revolving credit facility may be made until maturity on September 30, 2027 .

Borrowings under the UACL Credit Agreement bear interest at index-adjusted SOFR, or a base rate, plus an applicable margin for each based on the borrower’s leverage ratio.

We may borrow under the revolving credit facility until maturity on September 30, 2027 .

Borrowings bear interest at index-adjusted SOFR, or a base rate, plus an applicable margin based on the borrowers’ leverage ratio.

The UACL Credit Agreement is secured by a first-priority pledge of the capital stock of applicable subsidiaries, as well as first-priority perfected security interest in cash, deposits, accounts receivable, and selected other assets of the applicable borrowers.

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 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.

At March 30, 2024, 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.

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 %.

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

The Company used the facility’s proceeds to repay then existing balances under a term loan portion of the Revolving Credit Facility and certain other real estate financing obligations.

The facility matures on April 29, 2032 .

(4) Our Real Estate Facility facilitated a $ 165.4 million term loan, and the facility matures on April 29, 2032 .

Obligations under the facility are secured by first-priority mortgages on specific parcels of real estate owned by the Company, including all land and real property improvements, and first-priority assignments of rents and related leases of the loan parties.

1 unchanged sentence

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

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

At March 30, 2024, we were in compliance with all covenants under the facility.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(5) Debt –

(6) Debt – continued

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

At March 30, 2024, the maximum available borrowings under the line of credit were $ 5.7 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 $ 80.8 million.

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

At March 30, 2024, the fair value of the swap agreement was an asset of $ 2.6 million.

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

1 unchanged sentence

(7) Fair Value Measurements and Disclosures

FASB ASC Topic 820, “

Fair Value Measurements and Disclosures, ”

defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date and expanded disclosures with respect to fair value measurements.

FASB ASC Topic 820, “ Fair Value Measurements and Disclosures, ” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date and expanded disclosures with respect to fair value measurements.

FASB ASC Topic 820 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value.

1 unchanged sentence

The three levels of inputs used to measure fair value are as follows:

Level 1 —

Quoted prices in active markets for identical assets or liabilities.

Level 2 —

Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets;

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets;

quoted prices for identical or similar assets and liabilities in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data.

Level 3 —

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

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

8 unchanged sentences

Notes to Unaudited Consolidated Financial Statements - Continued

(6) Fair Value Measurements and Disclosures –

(7) Fair Value Measurements and Disclosures – continued

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

Cash equivalents –

This category consists of money market funds which are listed as Level 1 assets and measured at fair value based on quoted prices for identical instruments in active markets.

Marketable securities –

Marketable securities represent equity securities, which consist of common and preferred stocks, are actively traded on public exchanges and are listed as Level 1 assets.

• Cash equivalents – This category consists of money market funds which are listed as Level 1 assets and measured at fair value based on quoted prices for identical instruments in active markets.

• Marketable securities – Marketable securities represent equity securities, which consist of common and preferred stocks, are actively traded on public exchanges and are listed as Level 1 assets.

Fair value was measured based on quoted prices for these securities in active markets.

Interest rate swap –

The fair value of our interest rate swap is determined using a methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments).

• Interest rate swap – The fair value of our interest rate swap is determined using a methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments).

The variable cash receipts (or payments) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves.

The fair value measurement also incorporates credit valuation adjustments to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk.

Our Revolving Credit Facility and our Real Estate Facility consist of variable rate borrowings.

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

The fair value measurement also incorporates credit valuation adjustments to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk.

Our Revolving Credit Facility, UACL Credit Agreement and Real Estate Facility consist of variable rate borrowings.

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

The carrying value of these borrowings approximate fair value because the applicable interest rates are adjusted frequently based on short-term market rates.

1 unchanged sentence

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

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

The carrying value and estimated fair value of these promissory notes at March 30, 2024 is summarized as follows:

Carrying Value

2 unchanged sentences

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

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.

As of March 30, 2024, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment.

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.

These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using our incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease is not readily determinable.

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 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.

As of March 30, 2024, 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.

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.

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

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

Thirteen Weeks Ended October 1, 2022

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

Thirty-nine Weeks Ended September 30, 2023

(8) Leases – continued

The following table summarizes our lease costs for the thirteen weeks ended March 30, 2024 and April 1, 2023 (in thousands):

Thirteen Weeks Ended March 30, 2024

With Affiliates

5 unchanged sentences

Total lease cost

Thirty-nine Weeks Ended October 1, 2022

Thirteen Weeks Ended April 1, 2023

With Affiliates

5 unchanged sentences

Total lease cost

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

The following table summarizes other lease related information as of and for the thirteen week periods ended March 30, 2024 and April 1, 2023 (in thousands):

Thirteen Weeks Ended March 30, 2024

Other information

1 unchanged sentence

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

Right-of-use assets change due to lease termination

Weighted-average remaining lease term (in years)

Weighted-average discount rate

October 1, 2022

April 1, 2023

Other information

1 unchanged sentence

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

Right-of-use assets change due to lease termination

Right-of-use asset 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 September 30, 2023, are as follows (in thousands):

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(8) Leases – continued

Future minimum lease payments under these operating leases as of March 30, 2024, 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

(9) Transactions with Affiliates

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.

Moroun is Chair of our Board of Directors and his son, Matthew J.

Moroun, is a member of our Board of Directors.

Certain Moroun family trusts beneficially own a majority of our outstanding shares.

Moroun is trustee of these trusts with investment authority over the shares, and Frederick P.

Calderone, a member of our Board of Directors, is special trustee of these trusts with voting authority over the shares.

The Moroun family also owns or significantly influences the management and operating policies of other businesses engaged in transportation, insurance, business services, and real estate development and management.

In the ordinary course of business, we procure from these companies certain supplementary administrative support services, including legal, human resources, tax, and IT infrastructure services.

The Audit Committee of our Board of Directors 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 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):

We also purchase other services from our affiliates.

Following is a schedule of cost incurred and included in operating expenses for services provided by affiliates for the thirteen weeks ended March 30, 2024 and April 1, 2023 (in thousands):

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Real estate rent and related costs

2 unchanged sentences

Contracted transportation services

We pay the direct variable cost of maintenance, fueling and other operational support costs for services delivered at our affiliate’s trucking terminals that are geographically remote from our own facilities.

Such costs are billed when incurred, paid on a routine basis, and reflect actual labor utilization, repair parts costs or quantities of fuel purchased.

3 unchanged sentences

however, we are not limited to such arrangements.

See Note 7, “Leases”

for further information regarding the cost of leased properties.

We purchase employee medical, workers’

compensation, property and casualty, cargo, warehousing and other general liability insurance from an insurance company controlled by our controlling shareholder.

See Note 8, “Leases” for further information regarding the cost of leased properties.

We purchase employee medical, workers’ compensation, property and casualty, cargo, warehousing and other general liability insurance from an insurance company controlled by our controlling shareholder.

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

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.

At March 30, 2024 and December 31, 2023, there were $ 16.1 million and $ 14.3 million, respectively, included in each of these accounts for insured claims.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(9) Transactions with Affiliates – continued

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 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.

At March 30, 2024 and December 31, 2023, amounts due to affiliates were $ 23.3 million and $ 20.7 million, respectively.

During the thirteen weeks ended March 30, 2024, we purchased trailers from an affiliate totaling $ 1.6 million.

There were no such purchases made during the thirteen weeks ended April 1, 2023.

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.

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 –

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

Services provided by Universal to Affiliates

We periodically assist companies that are owned by our controlling shareholder by providing selected transportation and logistics services in connection with their specific customer contracts or purchase orders.

We periodically assist our affiliates by providing selected transportation and logistics services in connection with their specific customer contracts or purchase orders.

We may also lease facilities to our affiliates on an as-needed basis.

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 thirty-nine weeks ended September 30, 2023 and October 1, 2022 (in thousands):

Following is a schedule of services provided to affiliates for the thirteen weeks and ended March 30, 2024 and April 1, 2023 (in thousands):

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contracted transportation services

Facilities and related support

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.

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.

At March 30, 2024 and December 31, 2023, amounts due from affiliates were $ 1.1 million and $ 0.7 million, respectively.

(10) Stock Based Compensation

On April 23, 2014, our Board of Directors adopted our 2014 Amended and Restated Stock Incentive Plan.

The Plan was approved at the 2014 annual meeting of shareholders and became effective as of the date our Board adopted it.

In May 2022, the Company’s shareholders approved an amendment to the Plan to increase the number of shares of common stock authorized for issuance by 200,000 shares.

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.

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.

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.

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.

In February 2024, we granted 21,105 shares of restricted stock under our equity plan to certain employees, including 5,160 shares to our Chief Executive Officer and 5,223 shares to our Chief Financial Officer.

The restricted stock awards have a grant date fair value of $ 31.96 per share, based on the closing price of our stock.

The shares will vest in four equal installments on each March 15 in 2025, 2026, 2027, and 2028, subject to their continued employment with us.

In May 2023, we granted 3,549 shares of common stock under our equity plan to non-employee directors.

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

In March 2023, we granted 34,611 shares of restricted stock under our equity plan to certain 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 our stock.

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

In September 2021, we granted 2,355 shares of restricted stock under our equity plan to one of our employees.

This restricted stock award has a fair value of $ 20.46 per share, based on the closing price of our stock on the grant date.

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

In February 2020, we granted 5,000 shares of restricted stock under our equity plan to our Chief Financial Officer.

This restricted stock award has a fair value of $ 17.74 per share, based on the closing price of our stock on the grant date.

The shares vested on February 20, 2024.

In January 2020, we granted 60,000 shares of restricted stock under our equity plan to our Chief Executive Officer.

This restricted stock award has a fair value of $ 18.82 per share, based on the closing price of our stock on the grant date.

The shares will vest in installments of 20,000 shares on January 10, 2024 and January 10, 2026, and installments of 10,000 shares on January 10, 2027 and January 10, 2028, subject to his continued employment with us.

A grantee’s vesting of restricted stock awards may be accelerated under certain conditions, including retirement.

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.

A grantee’s vesting of restricted stock awards may be accelerated under certain conditions, including retirement.

The following table summarizes the status of the Company’s non-vested shares and related information for the period indicated:

(10) Stock Based Compensation – continued

The following table summarizes the status of our non-vested shares and related information for the period indicated:

Average Grant

1 unchanged sentence

Non-vested at January 1, 2024

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.

Balance at March 30, 2024

In the thirteen week periods ended March 30, 2024 and April 1, 2023, the total grant date fair value of vested shares recognized as compensation costs was $ 0.7 million and $ 0.2 million, respectively.

As of March 30, 2024, 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.

As a result, the Company expects to recognize stock-based compensation expense of $ 0.7 million in 2024, $ 0.3 million in 2025, $ 0.6 million in 2026, $ 0.4 million in 2027, and $ 0.2 million in 2028.

As a result, we expect to recognize stock-based compensation expense of $ 0.4 million in 2025, $ 0.8 million in 2026, $ 0.6 million in 2027, and $ 0.4 million in 2028.

(11) Earnings Per Share

1 unchanged sentence

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

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.

For the thirteen weeks ended March 30, 2024 and April 1, 2023, there were 21,011 and 33,348 weighted average non-vested shares of restricted stock, respectively, 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 ended March 30, 2024 or April 1, 2023.

(12) Dividends

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 .

On February 14, 2024 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on April 1, 2024 to shareholders of record at the close of business on March 4, 2024 .

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

(13) Segment Reporting

6 unchanged sentences

Our company-managed brokerage segment provides for the pick-up and delivery of individual freight shipments using broker carriers, coordinated by our company-managed operations.

Other non-reportable segments are comprised of the Company’s subsidiaries that provide support services to other subsidiaries.

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 thirty-nine week periods ended September 30, 2023 and October 1, 2022 (in thousands):

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(13) Segment Reporting – continued

The following tables summarize information about our reportable segments for the thirteen week periods ended March 30, 2024 and April 1, 2023 (in thousands):

Operating Revenues

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

3 unchanged sentences

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

3 unchanged sentences

Thirteen Weeks Ended

Thirty-nine Weeks Ended

September 30,

Contract logistics

1 unchanged sentence

Total income from operations

(14) Treasury Stock

During the first quarter of 2024, we retired 4,722,877 shares of our treasury stock.

Upon retirement of the treasury shares, we allocated the excess of the repurchase price over the par value of shares acquired to both retained earnings and paid-in capital.

The portion allocated to paid-in capital was determined by applying the average paid-in capital per share, and the remaining portion was recorded to retained earnings.

There was no effect on the Company’s overall equity position due to the retirement of treasury shares.

The Company accounts for treasury stock using the cost method.

As of March 30, 2024, there were no shares held in the treasury.

UNIVERSAL LOGISTICS HOLDINGS, INC.

2 unchanged sentences

Our principal commitments relate to long-term real estate leases and payment obligations to equipment vendors.

The Company is involved in certain other claims and pending litigation arising from the ordinary conduct of business.

We are involved in certain other claims and pending litigation arising from the ordinary conduct of business.

We also provide accruals for claims within our self-insured retention amounts.

Based on the knowledge of the facts, and in certain cases, opinions of outside counsel, in the Company’s opinion the resolution of these claims and pending litigation will not have a material effect on our financial position, results of operations or cash flows.

Based on the knowledge of the facts, and in certain cases, opinions of outside counsel, in our opinion the resolution of these claims and pending litigation will not have a material effect on our financial position, results of operations or cash flows.

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 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.

At March 30, 2024, approximately 32 % of our employees were subject to collective bargaining agreements that are renegotiated periodically, 45 % of which are subject to contracts that expire in 2024.

(16) Subsequent Events

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 .

On April 25, 2024 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on July 1, 2024 to shareholders of record at the close of business on June 3, 2024 .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some of the statements and assumptions in this Form 10-Q are forward-looking statements.

These statements identify prospective information.

Important factors could cause actual results to differ, possibly materially, from those in the forward-looking statements.

In some cases you can identify forward-looking statements by words such as “anticipate,”

“expect,”

“believe,”

“targets,”

“could,”

“estimate,”

“plan,”

“intend,”

“may,”

“should,”

“will”

and “would”

or other similar words.

You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other “forward-looking”

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved.

Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.

The factors listed in the section captioned “Risk Factors”

in Part I, Item 1A in our Form 10-K for the year ended December 31, 2022 and Part II, Item 1A of this Form 10-Q, as well as any other cautionary language in these filings, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.

Forward-looking statements speak only as of the date the statements are made.

We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws.

If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.

Universal Logistics Holdings, Inc.

is a holding company that owns subsidiaries engaged in providing a variety of customized transportation and logistics solutions throughout the United States, and in Mexico, Canada and Colombia.

Our operating subsidiaries provide customers with a broad array of services across their entire supply chain, including truckload, brokerage, intermodal, dedicated and value-added services.

Our operating subsidiaries provide a comprehensive suite of transportation and logistics solutions that allow our customers and clients to reduce costs and manage their global supply chains more efficiently.

We market our services through a direct sales and marketing network focused on selling our portfolio of services to large customers in specific industry sectors, through a network of agents who solicit freight business directly from shippers, and through company-managed facilities and full-service freight forwarding and customs house brokerage offices.

We believe our flexible business model is highly scalable and will continue to support our growth with comparatively modest capital expenditure requirements.

Our business model, combined with a disciplined approach to contract structuring and pricing, creates a highly flexible cost structure that allows us to expand and contract quickly in response to changes in demand from our customers.

We generate substantially all of our revenues through fees charged to customers for the transportation of freight and for the customized logistics services we provide.

We also derive revenue from fuel surcharges, where separately identifiable, loading and unloading activities, equipment detention, container management and storage and other related services.

Operations aggregated in our transportation segment are associated with individual freight shipments coordinated by our agents, company-managed terminals and specialized services operations.

In contrast, operations aggregated in our logistics segment deliver value-added services and transportation services to specific customers on a dedicated basis, generally pursuant to contract terms of one year or longer.

Our segments are distinguished by the amount of forward visibility we have in regard to pricing and volumes, and also by the extent to which we dedicate resources and Company-owned equipment.

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 and the unaudited Consolidated Financial Statements and related notes contained in this Quarterly Report on Form 10-Q.

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.

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

For financial reporting, we broadly group our services into the following categories:

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

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

Thirty-nine Weeks Ended

September 30,

Operating revenues:

Truckload services

Brokerage services

Intermodal services

Dedicated services

Value-added services

Total operating revenues

Results of Operations

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

September 30,

Percent Change in Dollar Amount

(Dollars in millions)

Operating revenues

Operating expenses:

Purchased transportation and equipment rent

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 $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 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.

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 .

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

Occupancy expense .

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

General and administrative .

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

Insurance and claims .

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 .

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 .

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

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) .

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 .

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 expenses:

Purchased transportation and equipment rent

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.

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.

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 .

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

Occupancy expense .

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

General and administrative .

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

Insurance and claims .

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 .

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 .

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

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) .

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 .

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

Our primary sources of liquidity are funds generated by operations, loans and extensions of credit under our credit facilities, on margin against our marketable securities and from installment notes, and proceeds from the sales of marketable securities.

We use secured asset lending to fund a substantial portion of purchases of tractors, trailers and material handling equipment.

We employ a flexible operating strategy which we believe lowers our capital expenditure requirements.

In general, our facilities used in our value-added services are leased on terms that are either substantially matched to our customer’s contracts, are month-to-month or are provided to us by our customers.

We also utilize owner-operators and third-party carriers to provide a significant portion of our transportation and specialized services.

A significant portion of the tractors and trailers used in our business are provided by our owner-operators.

In addition, our use of agents reduces our overall need for large terminals.

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 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 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.

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.

After considering the regular quarterly dividends made during the year, the Board of Directors also evaluates the potential declaration of an annual special dividend payable in the first quarter of each year.

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

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 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.

Depending on prospective consideration to be paid for an acquisition, any such opportunities would be financed first from available cash and cash equivalents and availability of borrowings under our credit facilities.

Revolving Credit, Promissory Notes and Term Loan Agreements

Our revolving credit facility (the “Revolving Credit Facility”) provides for a $400 million revolver at a variable rate of interest based on index-adjusted SOFR or a base rate and matures on September 30, 2027.

The Revolving Credit Facility, which is secured by cash, deposits, accounts receivable, and selected other assets of the applicable borrowers, 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.

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

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.

The UACL Credit Agreement, which is secured by cash, deposits, accounts receivable, and selected other assets of the applicable borrowers, 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.

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

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”).

The notes issued in connection with the Equipment Financing, 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%.

Certain wholly owned subsidiaries entered into a $165.4 million term loan facility to repay outstanding balances under a then-existing term loan and certain other real estate notes (the “Real Estate Facility”).

The Real Estate Facility matures on April 29, 2032 and is secured by first-priority mortgages on specific parcels of real estate owned by the Company, including all land and real property improvements, and first-priority assignments of rents and related leases of the loan parties.

The Real Estate Facility includes customary affirmative and negative covenants, and principal and interest is payable on the facility on a monthly basis, based on an annual amortization of 10%.

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

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”).

It bears interest at Term SOFR plus 1.10%.

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 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 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.

The $161.2 million in net cash provided by operations was primarily attributed to $71.5 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 $83.0 million, net.

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 increases in accrued expenses and other current liabilities and income taxes payable.

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 and other long-term liabilities.

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 $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 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.

Conversely, such demand generally decreases during the third quarter of each year due to the impact of scheduled OEM customer plant shutdowns in July for vacations and changeovers in production lines for new model years.

Our value-added services business is also impacted in the fourth quarter by plant shutdowns during the December holiday period.

Prolonged adverse weather conditions, particularly in winter months, can also adversely impact margins due to productivity declines and related challenges meeting customer service requirements.

Additionally, our transportation services business, excluding dedicated transportation tied to specific customer supply chains, is generally impacted by decreased activity during the post-holiday winter season and, in certain states during hurricane season, because some shippers reduce their shipments and inclement weather impedes trucking operations or underlying customer demand.

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 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