UNIVERSAL LOGISTICS HOLDINGS, INC. 10-Q

ITEM 1: FINANCIAL STATEMENTS UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Consolidated Balance Sheets (In thousands, except share data) September 28, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 11,834 $ 12,511 Marketable securities 11,689 10,772 Accounts receivable – net of allowance for credit losses of $ 9,303 and $ 11,229 , respectively 300,150 287,946 Contract assets 26,079 729 Other receivables 30,004 22,633 Prepaid expenses and other 24,704 30,171 Due from affiliates 1,286 710 Total current assets 405,746 365,472 Property and equipment – net of accumulated depreciation of $ 423,530 and $ 370,273 , respectively 697,939 561,089 Operating lease right-of-use asset 69,034 87,208 Goodwill 167,264 170,730 Intangible assets – net of accumulated amortization of $ 148,095 and $ 134,514 , respectively 54,992 61,296 Contract assets, net of current portion 154,592 — Deferred income taxes 1,225 1,225 Other assets 4,102 6,503 Total assets $ 1,554,894 $ 1,253,523 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 78,443 $ 64,102 Current portion of long-term debt 85,749 70,689 Current portion of operating lease liabilities 28,174 29,998 Accrued expenses and other current liabilities 49,996 43,062 Insurance and claims 32,756 25,464 Due to affiliates 18,519 20,737 Income taxes payable 3,726 6,364 Total current liabilities 297,363 260,416 Long-term liabilities: Long-term debt, net of current portion 471,700 311,235 Operating lease liabilities, net of current portion 46,646 63,620 Deferred income taxes 103,788 79,567 Other long-term liabilities 4,415 6,487 Total long-term liabilities 626,549 460,909 Shareholders' equity: Common stock, no par value. Authorized 100,000,000 shares; 26,319,754 and 31,007,100 shares issued; 26,317,797 and 26,284,223 shares outstanding, respectively 26,320 31,008 Paid-in capital 5,016 5,103 Treasury stock, at cost; 1,957 and 4,722,877 shares ( 83 ) ( 96,840 ) Retained earnings 605,606 595,450 Accumulated other comprehensive income (loss): Interest rate swaps, net of income taxes of $ 161 and $ 457 , respectively 475 1,350 Foreign currency translation adjustments ( 6,352 ) ( 3,873 ) Total shareholders’ equity 630,982 532,198 Total liabilities and shareholders’ equity $ 1,554,894 $ 1,253,523 See accompanying notes to consolidated financial statements. 2 UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Consolidated Statements of Income (In thousands, except per share data) Thirteen Weeks Ended Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Operating revenues: Truckload services $ 63,641 $ 69,598 $ 172,547 $ 167,858 Brokerage services 42,440 56,894 155,714 185,892 Intermodal services 75,558 86,630 230,342 289,241 Dedicated services 87,357 86,701 266,389 258,003 Value-added services 157,837 121,428 555,912 370,225 Total operating revenues 426,833 421,251 1,380,904 1,271,219 Operating expenses: Purchased transportation and equipment rent 120,700 147,470 382,628 443,434 Direct personnel and related benefits 132,081 134,866 408,381 412,004 Operating supplies and expenses 60,532 43,060 216,914 130,351 Commission expense 6,985 8,334 22,485 24,149 Occupancy expense 11,179 10,913 32,189 33,106 General and administrative 13,037 13,633 41,242 38,967 Insurance and claims 5,681 6,828 20,722 20,795 Depreciation and amortization 30,284 19,386 87,795 57,061 Impairment expense 3,720 — 3,720 — Total operating expenses 384,199 384,490 1,216,076 1,159,867 Income from operations 42,634 36,761 164,828 111,352 Interest income 1,130 45 2,257 1,419 Interest expense ( 8,546 ) ( 6,540 ) ( 22,635 ) ( 18,009 ) Other non-operating income 4 588 2,007 885 Income before income taxes 35,222 30,854 146,457 95,647 Income tax expense 8,682 7,807 36,726 24,159 Net income $ 26,540 $ 23,047 $ 109,731 $ 71,488 Earnings per common share: Basic $ 1.01 $ 0.88 $ 4.17 $ 2.72 Diluted $ 1.01 $ 0.88 $ 4.17 $ 2.72 Weighted average number of common shares outstanding: Basic 26,318 26,286 26,314 26,284 Diluted 26,353 26,310 26,345 26,311 Dividends declared per common share $ 0.105 $ 0.105 $ 0.315 $ 0.315 See accompanying notes to consolidated financial statements. 3 UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Consolidated Statements of Comprehensive Income (In thousands) Thirteen Weeks Ended Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Net Income $ 26,540 $ 23,047 $ 109,731 $ 71,488 Other comprehensive income (loss): Unrealized changes in fair value of interest rate swaps, net of income taxes of $( 480 ), $ 131 , $( 296 ) and $ 221 , respectively ( 1,424 ) 385 ( 875 ) 647 Foreign currency translation adjustments ( 276 ) 217 ( 2,479 ) ( 758 ) Total other comprehensive income (loss) ( 1,700 ) 602 ( 3,354 ) ( 111 ) Total comprehensive income $ 24,840 $ 23,649 $ 106,377 $ 71,377 See accompanying notes to consolidated financial statements. 4 UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Consolidated Statements of Cash Flows (In thousands) Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 Cash flows from operating activities: Net income $ 109,731 $ 71,488 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 87,795 57,061 Noncash lease expense 22,686 22,941 Impairment expense 3,720 — Gain on marketable equity securities ( 936 ) ( 693 ) Loss (gain) on disposal of property and equipment 678 ( 1,511 ) Amortization of debt issuance costs 723 568 Stock-based compensation 779 261 Provision for credit losses 1,425 4,334 Deferred income taxes 24,220 — Change in assets and liabilities: Trade and other accounts receivable ( 18,164 ) 40,853 Contract assets, prepaid expenses and other assets ( 172,890 ) ( 2,121 ) Principal reduction in operating lease liabilities ( 23,521 ) ( 22,910 ) Accounts payable, accrued expenses, income taxes payable, insurance and claims and other current liabilities 21,253 1,772 Due to/from affiliates, net ( 2,795 ) ( 6,737 ) Other long-term liabilities ( 2,071 ) ( 4,098 ) Net cash provided by operating activities 52,633 161,208 Cash flows from investing activities: Capital expenditures ( 210,813 ) ( 192,098 ) Proceeds from the sale of property and equipment 1,795 3,290 Proceeds from the sale of marketable securities 19 202 Acquisition of business ( 10,000 ) — Net cash used in investing activities ( 218,999 ) ( 188,606 ) Cash flows from financing activities: Proceeds from borrowing - revolving debt 365,470 113,860 Repayments of debt - revolving debt ( 273,405 ) ( 87,790 ) Proceeds from borrowing - term debt 162,653 38,999 Repayments of debt - term debt ( 79,917 ) ( 55,981 ) Dividends paid ( 8,289 ) ( 8,280 ) Capitalized financing costs — ( 947 ) Purchases of treasury stock ( 83 ) ( 134 ) Net cash provided by (used in) financing activities 166,429 ( 273 ) Effect of exchange rate changes on cash and cash equivalents ( 740 ) ( 2,699 ) Net decrease in cash ( 677 ) ( 30,370 ) Cash and cash equivalents – beginning of period 12,511 47,181 Cash and cash equivalents – end of period $ 11,834 $ 16,811 Supplemental cash flow information: Cash paid for interest $ 20,390 $ 17,062 Cash paid for income taxes $ 14,796 $ 20,479 See accompanying notes to consolidated financial statements. 5 UNIVERSAL LOGISTICS HOLDINGS, INC. Unaudited Consolidated Statements of Shareholders’ Equity (In thousands, except per share data) Common stock Paid-in capital Treasury stock Retained earnings Accumulated other comprehensive income (loss) Total Balances – December 31, 2022 $ 30,997 $ 4,852 $ ( 96,706 ) $ 513,589 $ ( 5,802 ) $ 446,930 Net income — — — 24,876 — 24,876 Comprehensive income (loss) — — — — ( 909 ) ( 909 ) Dividends ($ 0.105 per share) — — — ( 2,759 ) — ( 2,759 ) Stock based compensation 6 155 — — — 161 Balances – April 1, 2023 31,003 5,007 ( 96,706 ) 535,706 ( 6,711 ) 468,299 Net income — — — 23,566 — 23,566 Comprehensive income (loss) — — — — 196 196 Dividends ($ 0.105 per share) — — — ( 2,761 ) — ( 2,761 ) Stock based compensation 3 87 — — — 90 Balances - July 1, 2023 31,006 5,094 ( 96,706 ) 556,511 ( 6,515 ) 489,390 Net income — — — 23,047 — 23,047 Comprehensive income (loss) — — — — 602 602 Purchases of treasury stock — — ( 134 ) — — ( 134 ) Dividends ($ 0.105 per share) — — — ( 2,760 ) — ( 2,760 ) Stock based compensation 1 9 — — — 10 Balances – September 30, 2023 $ 31,007 $ 5,103 $ ( 96,840 ) $ 576,798 $ ( 5,913 ) $ 510,155 Balances – December 31, 2023 $ 31,008 $ 5,103 $ ( 96,840 ) $ 595,450 $ ( 2,523 ) $ 532,198 Net income — — — 52,457 — 52,457 Comprehensive income (loss) — — — — 1,353 1,353 Dividends ($ 0.105 per share) — — — ( 2,762 ) — ( 2,762 ) Stock based compensation 33 667 — — — 700 Retirement of treasury stock ( 4,723 ) ( 831 ) 96,840 ( 91,286 ) — — Balances – March 30, 2024 26,318 4,939 — 553,859 ( 1,170 ) 583,946 Net income — — — 30,734 — 30,734 Comprehensive income (loss) — — — — ( 3,007 ) ( 3,007 ) Dividends ($ 0.105 per share) — — — ( 2,764 ) — ( 2,764 ) Stock based compensation 1 68 — — — 69 Purchases of treasury stock — — ( 83 ) — — ( 83 ) Balances - June 29, 2024 26,319 5,007 ( 83 ) 581,829 ( 4,177 ) 608,895 Net income — — — 26,540 — 26,540 Comprehensive income (loss) — — — — ( 1,700 ) ( 1,700 ) Dividends ($ 0.105 per share) — — — ( 2,763 ) — ( 2,763 ) Stock based compensation 1 9 — — — 10 Balances – September 28, 2024 $ 26,320 $ 5,016 $ ( 83 ) $ 605,606 $ ( 5,877 ) $ 630,982 See accompanying notes to consolidated financial statements. 6 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements (1) Basis of Presentation 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. 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. All intercompany transactions and balances have been eliminated in consolidation. 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, 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 28, 2024. 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 August 2024, the Company closed its company-managed brokerage operations in Nashville, TN. In connection with the closure, the Company recorded pre-tax losses of approximately $ 8.6 million ($ 6.4 million net of tax, or $ 0.24 per basic and diluted share) during the quarter ended September 28, 2024, including $ 2.8 million of non-cash impairment charges. During the third quarter of 2024, the Company identified certain triggering events related to a component of its former company-managed brokerage 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, and recorded an additional goodwill impairment charge of $ 0.9 million during the quarter ended September 28, 2024. Total goodwill impairment charges recorded during the third quarter of 2024 were $ 3.5 million ($ 2.6 million net of tax, or $ 0.10 per basic and diluted share). In June 2024, the Company revised the estimated useful life and salvage values of certain equipment. The change resulted in additional depreciation expense of $ 11.3 million recorded during the quarter ended June 29, 2024 ($ 8.5 million net of tax, or $ 0.32 per basic and diluted share). 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 September 28, 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 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 ($ 1.7 million net of tax, or $ 0.06 per basic and diluted share) recorded during each of the quarters ended March 30, 2024, June 29, 2024 and September 28, 2024. Current Economic Conditions The Company makes estimates and assumptions that affect reported amounts and disclosures included in its financial statements and accompanying notes and assesses certain accounting matters that require consideration of forecasted financial information. The Company's assumptions about future conditions important to these estimates and assumptions are subject to uncertainty, including the negative impact inflationary pressures can have on our operating costs. Prolonged periods of inflation could cause interest rates, equipment, maintenance, labor and other operating costs to continue to increase. 7 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (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. (3) Revenue Recognition 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. Truckload services include dry van, flatbed, heavy-haul and refrigerated operations. We transport a wide variety of general commodities, including automotive parts, machinery, building materials, paper, food, consumer goods, furniture, steel and other metals on behalf of customers in various industries. To complement our available capacity, we also provide customers with freight brokerage services by utilizing third-party transportation providers to move freight. Intermodal services include rail-truck, steamship-truck and support services. Our intermodal support services are primarily short- to medium-distance delivery of rail and steamship containers between the railhead or port and the customer. Dedicated services are primarily provided in support of automotive and retail customers using van equipment. Our dedicated services are primarily short-run or round-trip moves within a defined geographic area. Transportation services are short-term in nature; agreements governing their provision generally have a term of one year or less. They do not contain significant financing components. The Company recognizes revenue over the period transportation services are provided to the customer, including service performed as of the end of the reporting period for loads currently in-transit, in order to recognize the value that is transferred to a customer over the course of the transportation service. We determine revenue in-transit using the input method, under which revenue is recognized based on the duration of time that has lapsed from the departure date (start of transportation services) to the arrival date (completion of transportation services). 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. Value-added services, which are typically dedicated to individual customer requirements, include material handling, consolidation, sequencing, sub-assembly, cross-dock services, kitting, repacking, warehousing, returnable container management and specialty project development. Value-added revenues are substantially driven by the level of demand for outsourced logistics services and specialty 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. 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. 8 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (3) Revenue Recognition - continued 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. The following table provides information related to contract balances associated with our contracts with customers (in thousands): September 28, 2024 December 31, 2023 Contract assets $ 26,079 $ 729 Contract assets, net of current portion 154,592 — Total $ 180,671 $ 729 We generally receive payment for performance obligations within 45 days of completion of transportation services and 65 days for completion of value-added services. 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 Marketable equity securities are carried at fair value, with gains and losses in fair market value included in the determination of net income. The fair value of marketable equity securities is determined based on quoted market prices in active markets, as described in Note 9. The following table sets forth market value, cost basis, and unrealized gains on equity securities (in thousands): September 28, 2024 December 31, 2023 Fair value $ 11,689 $ 10,772 Cost basis 7,264 7,316 Unrealized gain $ 4,425 $ 3,456 The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities (in thousands): September 28, 2024 December 31, 2023 Gross unrealized gains $ 5,008 $ 4,124 Gross unrealized losses ( 583 ) ( 668 ) Net unrealized gains $ 4,425 $ 3,456 9 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (4) Marketable Securities – continued 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 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Realized gain Sale proceeds $ 19 $ 110 $ 19 $ 202 Cost basis of securities sold 17 26 17 27 Realized gain $ 2 $ 84 $ 2 $ 175 Realized gain, net of taxes $ 1 $ 63 $ 1 $ 131 During the thirteen-week and thirty-nine week periods ended September 28, 2024, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $ 139,000 and $ 934,000 , respectively, which was reported in other non-operating income for the period. 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 for the period. (5) Acquisitions On September 13, 2024 , the Company acquired certain assets of East Texas Heavy Haul, Inc. (“ETHH”), through a limited asset purchase agreement. We expect the acquisition of ETHH to strategically enhance our specialized heavy-haul wind transportation business and provide for a direct relationship with ETHH’s customer base. The total cash purchase price was $ 10.0 million. The Company used available cash and borrowings on its revolving credit facility to finance the acquisition. Approximately $ 0.1 million of transaction related costs were incurred in the acquisition. The Company accounted for the acquisition in accordance with ASC 805 “Business Combinations.” We recorded the assets acquired at their estimated fair value as of September 13, 2024. The pro forma effect of this acquisition has been omitted, as the effect is immaterial to the Company’s consolidated results of operations, financial position and cash flows. These values are based, in part, upon preliminary appraisals for certain assets and are subject to change when additional information concerning final asset values is obtained. The final purchase price allocations may result in adjustments to certain assets, including the residual amount allocated to goodwill, which would be deductible for income tax purposes. The preliminary allocation of the purchase price is as follows (in thousands): Property and equipment $ 2,000 Intangible assets 8,000 $ 10,000 The intangible assets acquired represent non-competition agreements that are being amortized over a period of seven years . The Company used the discounted cash flow method to estimate the fair value of these acquired intangible assets. 10 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (6) Goodwill The changes in the carrying amount of goodwill during the thirty-nine weeks ended September 28, 2024 are as follows (in thousands): Balance as of January 1, 2024 $ 170,730 Goodwill impairment ( 3,466 ) Balance as of September 28, 2024 $ 167,264 As described in Note 1, “Basis of Presentation”, we recorded aggregate impairment charges of $ 3.5 million during the thirteen weeks ended September 28, 2024 related to reporting units within our former company-managed brokerage segment. At both September 28, 2024 and December 31, 2023, $ 56.3 million of goodwill was recorded in our contract logistics segment, $ 101.1 million in our intermodal segment and $ 9.8 million in our trucking segment, respectively. At September 28, 2024 and December 31, 2023, $ 0 and $ 3.5 million of goodwill was recorded in our former company-managed brokerage segment, respectively. (7) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities are comprised of the following (in thousands): September 28, 2024 December 31, 2023 Accrued payroll $ 21,669 $ 18,047 Accrued payroll taxes 3,767 3,149 Driver escrow liabilities 2,812 3,275 Legal settlements and claims 2,900 4,050 Commissions, other taxes and other 18,848 14,541 Total $ 49,996 $ 43,062 (8) Debt Debt is comprised of the following (in thousands): Interest Rates at September 28, 2024 September 28, 2024 December 31, 2023 Outstanding Debt: Revolving Credit Facility (1) (2) 6.44 % $ 109,000 $ 21,934 UACL Credit Agreement (2) Term Loan 6.69 % 54,000 69,000 Revolver 6.69 % 5,000 — Equipment Financing (3) 2.25 % to 7.31 % 266,478 156,341 Real Estate Facility (4) 6.96 % 126,768 139,170 Margin Facility (5) 5.94 % — — Unamortized debt issuance costs ( 3,797 ) ( 4,521 ) 557,449 381,924 Less current portion of long-term debt 85,749 70,689 Total long-term debt, net of current portion $ 471,700 $ 311,235 (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 28, 2024, we were in compliance with all covenants under the facility, and $ 291.0 million was available for borrowing on the revolver. 11 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (8) Debt – continued (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. 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 28, 2024, 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. 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 7.31 %. (4) Our Real Estate Facility consists of 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. The credit agreement includes customary affirmative and negative covenants, and principal and interest are 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 28, 2024, we were in compliance with all covenants under the facility. (5) Our Margin Facility is a short-term line of credit secured by our portfolio of marketable securities. It bears interest at Term SOFR plus 1.10 %. The amount available under the line of credit is based on a percentage of the market value of the underlying securities. At September 28, 2024, the maximum available borrowings under the line of credit were $ 5.9 million. The Company is also party to an interest rate swap agreement that qualifies for hedge accounting. The Company executed the swap agreement to fix a portion of the interest rate on its variable rate debt. Under the swap agreement, the Company receives interest at Term SOFR and pays a fixed rate of 2.88 %. The swap agreement has an effective date of April 29, 2022, a maturity date of April 30, 2027 , and an amortizing notional amount of $ 75.8 million. At September 28, 2024, the fair value of the swap agreement was an asset of $ 0.6 million. Since the swap agreement qualifies for hedge accounting, the changes in fair value are recorded in other comprehensive income (loss), net of tax. See Note 9 for additional information pertaining to interest rate swaps. (9) 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 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. 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; 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. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. 12 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (9) Fair Value Measurements and Disclosures – continued 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 28, 2024 Level 1 Level 2 Level 3 Fair Value Measurement Assets Cash equivalents $ 8 $ — $ — $ 8 Marketable securities 11,689 — — 11,689 Interest rate swap — 636 — 636 Total $ 11,697 $ 636 $ — $ 12,333 December 31, 2023 Level 1 Level 2 Level 3 Fair Value Measurement Assets Cash equivalents $ 168 $ — $ — $ 168 Marketable securities 10,772 — — 10,772 Interest rate swap — 1,807 — 1,807 Total $ 10,940 $ 1,807 $ — $ 12,747 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. 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). 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, 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. For our Equipment Financing, the fair values are estimated using discounted cash flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangements. 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 28, 2024 is summarized as follows (in thousands): Carrying Value Estimated Fair Value Equipment promissory notes $ 266,478 $ 265,629 We have not elected the fair value option for any of our financial instruments. 13 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (10) Leases As of September 28, 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 28, 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. The following table summarizes our lease costs for the thirteen weeks and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands): Thirteen Weeks Ended September 28, 2024 With Affiliates With Third Parties Total Lease cost Operating lease cost $ 2,474 $ 6,428 $ 8,902 Short-term lease cost 212 2,727 2,939 Variable lease cost 237 1,104 1,341 Sublease income — — — Total lease cost $ 2,923 $ 10,259 $ 13,182 Thirteen Weeks Ended September 30, 2023 With Affiliates With Third Parties Total Lease cost Operating lease cost $ 2,387 $ 6,742 $ 9,129 Short-term lease cost 24 4,039 4,063 Variable lease cost 236 693 929 Sublease income — — — Total lease cost $ 2,647 $ 11,474 $ 14,121 14 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (10) Leases – continued Thirty-nine Weeks Ended September 29, 2024 With Affiliates With Third Parties Total Lease cost Operating lease cost $ 7,578 $ 19,163 $ 26,741 Short-term lease cost 301 8,090 8,391 Variable lease cost 718 3,380 4,098 Sublease income — — — Total lease cost $ 8,597 $ 30,633 $ 39,230 Thirty-nine Weeks Ended September 30, 2023 With Affiliates With Third Parties Total Lease cost Operating lease cost $ 7,166 $ 20,197 $ 27,363 Short-term lease cost 50 12,989 13,039 Variable lease cost 658 2,126 2,784 Sublease income — — — Total lease cost $ 7,874 $ 35,312 $ 43,186 The following table summarizes other lease related information as of and for the thirty-nine week periods ended September 28, 2024 and September 30, 2023 (in thousands): September 28, 2024 With Affiliates With Third Parties Total Other information Cash paid for amounts included in the measurement of operating leases $ 7,589 $ 19,777 $ 27,366 Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,916 $ 2,519 $ 6,435 Weighted-average remaining lease term (in years) 3.7 3.0 3.3 Weighted-average discount rate 7.8 % 6.0 % 6.5 % September 30, 2023 With Affiliates With Third Parties Total Other information Cash paid for amounts included in the measurement of operating leases $ 7,051 $ 20,163 $ 27,214 Right-of-use assets obtained in exchange for new operating lease liabilities $ 321 $ 14,138 $ 14,459 Right-of-use assets change due to lease termination $ ( 64 ) $ ( 145 ) $ ( 209 ) Weighted-average remaining lease term (in years) 4.4 3.4 3.7 Weighted-average discount rate 7.3 % 5.3 % 6.0 % 15 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (10) Leases – continued Future minimum lease payments under these operating leases as of September 28, 2024, are as follows (in thousands): With Affiliates With Third Parties Total 2024 (remaining) $ 2,396 $ 6,414 $ 8,810 2025 7,911 21,848 29,759 2026 5,317 17,895 23,212 2027 4,206 8,670 12,876 2028 4,013 1,333 5,346 Thereafter 3,101 — 3,101 Total required lease payments $ 26,944 $ 56,160 $ 83,104 Less amounts representing interest ( 8,284 ) Present value of lease liabilities $ 74,820 (11) Transactions with Affiliates Matthew T. 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. Matthew T. 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. We also purchase other services from our affiliates. The following is a schedule of cost incurred and included in operating expenses for services provided by affiliates for the thirteen weeks and thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively (in thousands): Thirteen Weeks Ended Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Insurance $ 22,758 $ 19,611 $ 64,747 $ 58,739 Real estate rent and related costs 4,987 3,250 14,866 9,789 Administrative support services 1,878 2,994 6,745 5,222 Truck fuel, maintenance and other operating costs 3,242 2,434 11,469 6,228 Contracted transportation services 72 93 147 264 Total $ 32,937 $ 28,382 $ 97,974 $ 80,242 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. We lease 28 facilities from related parties. Our occupancy is based on either month-to-month or contractual, multi-year lease arrangements that are billed and paid monthly. Leasing properties from a related party affords us significant operating flexibility; however, we are not limited to such arrangements. See Note 10, “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 28, 2024 and December 31, 2023, there were $ 17.7 million and $ 14.3 million, respectively, included in each of these accounts for insured claims. 16 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (11) 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 28, 2024 and December 31, 2023, amounts due to affiliates were $ 18.5 million and $ 20.7 million, respectively. During the thirty-nine weeks ended September 28, 2024, we purchased trailers from an affiliate totaling $ 3.1 million. During the thirty-nine weeks ended September 30, 2023, we purchased used tractors from an affiliate totaling $ 6.3 million. 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 September 28, 2024. 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. 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. 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 28, 2024 and September 30, 2023 (in thousands): Thirteen Weeks Ended Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Contracted transportation services $ 534 $ 1,878 $ 932 $ 3,746 Facilities and related support 645 800 1,735 920 Total $ 1,179 $ 2,678 $ 2,667 $ 4,666 At September 28, 2024 and December 31, 2023, amounts due from affiliates were $ 1.3 million and $ 0.7 million, respectively. (12) Stock Based Compensation In May 2024, we granted 1,545 shares of common stock under our equity plan to non-employee directors. These restricted stock awards have a fair value of $ 45.22 per share, based on the closing price of our stock on the grant date, and vested immediately. 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. 17 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (12) Stock Based Compensation – continued 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. The following table summarizes the status of the Company’s non-vested shares and related information for the period indicated: Shares Weighted Average Grant Date Fair Value Non-vested at January 1, 2024 100,458 $ 21.76 Granted 22,650 $ 31.96 Vested ( 35,531 ) $ 21.94 Forfeited — $ — Balance at September 28, 2024 87,577 $ 24.56 In the thirty-nine week periods ended September 28, 2024 and September 30, 2023, the total grant date fair value of vested shares recognized as compensation costs was $ 0.8 million and $ 0.3 million, respectively. Included in compensation cost during both the thirty-nine week periods ended September 28, 2024 and September 30, 2023 was approximately $ 0.1 million recognized as a result shares of stock granted to non-employee directors. As of September 28, 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, 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. (13) Earnings Per Share Basic earnings per common share amounts are based on the weighted average number of common shares outstanding, excluding outstanding non-vested restricted stock. 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 28, 2024, there were 35,546 and 31,106 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 September 30, 2023, we included 24,021 and 26,553 weighted average non-vested shares of restricted stock, respectively, 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 28, 2024 or September 30, 2023. (14) Dividends On July 25, 2024 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on October 1, 2024 to shareholders of record at the close of business on September 2, 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. 18 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (15) Segment Reporting During the third quarter of 2024, we changed the way we aggregate our business units and adopted a new segment reporting structure. In connection with this change, the historical results of the terminated company-managed brokerage business is included in other non-reportable segments. As a result, we now report our financial results in three distinct reportable segments: contract logistics, intermodal and trucking, 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. Operations aggregated in our contract logistics segment deliver value-added or dedicated transportation services to support in-bound logistics to industrial customers and major retailers on a contractual basis, generally pursuant to terms of one year or longer. Our intermodal segment is associated with local and regional drayage moves coordinated by company-managed terminals using a mix of owner-operators, company equipment and third-party capacity providers (broker carriers). Operations aggregated in our trucking segment are associated with individual freight shipments coordinated primarily by our agents using a mix of owner-operators, company equipment and broker carriers. Other non-reportable segments are comprised of legacy company-managed brokerage operations and 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 28, 2024 and September 30, 2023 (in thousands): Operating Revenues Thirteen Weeks Ended Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Contract logistics $ 245,194 $ 208,129 $ 822,301 $ 628,228 Intermodal 77,632 87,974 235,649 295,736 Trucking 87,047 97,085 248,142 258,043 Other 16,960 28,063 74,812 89,212 Total operating revenues $ 426,833 $ 421,251 $ 1,380,904 $ 1,271,219 Eliminated Inter-segment Revenues Thirteen Weeks Ended Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Contract logistics $ 42 $ 32 $ 113 $ 82 Intermodal 791 769 1,943 3,609 Trucking 12 4 12 72 Total eliminated inter-segment revenues $ 845 $ 805 $ 2,068 $ 3,763 Income from Operations Thirteen Weeks Ended Thirty-nine Weeks Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Contract logistics $ 45,623 $ 35,103 $ 179,990 $ 95,673 Intermodal ( 1,127 ) ( 4,470 ) ( 18,058 ) 2,568 Trucking 7,122 6,558 15,175 14,770 Other ( 8,984 ) ( 430 ) ( 12,279 ) ( 1,659 ) Total income from operations $ 42,634 $ 36,761 $ 164,828 $ 111,352 19 UNIVERSAL LOGISTICS HOLDINGS, INC. Notes to Unaudited Consolidated Financial Statements - Continued (16) Commitments and Contingencies 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 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. 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 28, 2024, approximately 34 % of our employees were subject to collective bargaining agreements that are renegotiated periodically, 29 % of which are subject to contracts that expire in 2024. (17) Subsequent Events On October 24, 2024 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on January 2, 2025 to shareholders of record at the close of business on December 2, 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. On September 30, 2024, the Company acquired all of the outstanding shares of Parsec, LLC, OB Leasing, LLC, and Parsec Intermodal of Canada Ltd. (collectively, “Parsec”). Parsec is a provider of terminal management services to Class I, regional, and short-line railroads across North America. The cash purchase price was $ 193.6 million, subject to customary post-closing adjustments. Parsec is expected to operate within the Company's contract logistics segment. The Company borrowed funds from its existing Revolving Credit Facility to finance the acquisition and is in the process of preparing the preliminary purchase accounting for this transaction. 20