What changed in this filing

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Item 1. Financial Statements

2021-08-12 compared with 2021-05-13 · 131 added, 79 removed, 424 unchanged (33% of the section changed)

53 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Operating revenues:

29 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Other comprehensive income (loss):

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

$ 33 and $( 135 ), respectively

Unrealized changes in fair value of interest rate swaps,

net of income taxes of $ 2 , $( 11 ), $ 35 and $( 146 ), respectively

Foreign currency translation adjustments

5 unchanged sentences

(In thousands)

Thirteen Weeks Ended

Twenty-six Weeks Ended

Cash flows from operating activities:

2 unchanged sentences

Noncash lease expense

Loss (gain) on marketable equity securities

(Gain) loss on marketable equity securities

Gain on disposal of property and equipment

5 unchanged sentences

Trade and other accounts receivable

Prepaid income taxes, prepaid expenses and other assets

Prepaid expenses and other assets

Principal reduction in operating lease liabilities

18 unchanged sentences

Dividends paid

Capitalized financing costs

Purchases of treasury stock

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

12 unchanged sentences

Balances – December 31, 2019

Comprehensive income

Dividends paid ($ 0.105 per share)

Comprehensive (loss)

Dividends ($ 0.105 per share)

Stock based compensation

1 unchanged sentence

Balances - April 4, 2020

Comprehensive income

Purchases of treasury stock

Balances – July 4, 2020

Balances – December 31, 2020

Comprehensive income

Dividends paid ($0.105 per share)

Dividends ($ 0.105 per share)

Stock based compensation

Balances - April 3, 2021

Comprehensive income

Dividends ($ 0.105 per share)

Balances – July 3, 2021

See accompanying notes to consolidated financial statements.

71 unchanged sentences

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).

The cost 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.

The fair value of marketable equity securities is determined based on quoted market prices in active markets, as described in Note 7.

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

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

Unrealized gain (loss)

3 unchanged sentences

Net unrealized gains (losses)

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

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

Thirteen weeks ended

Twenty-six weeks ended

Realized gain

3 unchanged sentences

Realized gain, net of taxes

The Company did no t sell marketable equity securities during the thirteen-week period April 4, 2020.

During the thirteen-week periods ended April 3, 2021 and April 4, 2020, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $ 974,000 and $( 3,400,000 ), respectively, which was reported in other non-operating income (expense) for the period.

During the thirteen-week and twenty-six week periods ended July 3, 2021, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $ 385,000 and $ 1,359,000 , respectively, which was reported in other non-operating income (expense) for the period.

During the thirteen-week and twenty-six week periods ended July 4, 2020, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $ 875,000 and $( 2,534,000 ), respectively, which was reported in other non-operating income (expense) for the period.

UNIVERSAL LOGISTICS HOLDINGS, INC.

9 unchanged sentences

Interest Rates

at April 3, 2021

at July 3, 2021

Outstanding Debt:

12 unchanged sentences

Borrowings under the revolving credit facility may be made until and mature on November 26, 2023 .

Borrowings under the Credit Agreement bear interest at LIBOR or a base rate, plus an applicable margin for each based on the Company’s leverage ratio.

Borrowings under the Credit Agreement bear interest at LIBOR or a base rate plus an applicable margin for each based the Company’s leverage ratio.

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

At April 3, 2021, we were in compliance with all covenants under the facility, and $ 67.5 million was available for borrowing on the revolver .

At July 3, 2021, we were in compliance with all covenants under the facility, and $ 49.5 million was available for borrowing on the revolver .

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Debt – continued

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

3 unchanged sentences

Each of the notes bears interest at a variable rate ranging from LIBOR plus 1.85 % to LIBOR plus 2.25 % .

At April 3, 2021, we were in compliance with all covenants.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Debt – continued

At July 3, 2021, we were in compliance with all covenants.

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

1 unchanged sentence

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

At April 3, 2021, the maximum available borrowings under the line of credit were $ 4.2 million.

At July 3, 2021, the maximum available borrowings under the line of credit were $ 4.2 million.

The Company is also party to two interest rate swap agreements that qualify for hedge accounting.

The Company executed the swap agreements to fix a portion of the interest rates on its variable rate debt that have a combined notional amount of $ 12.6 million at April 3, 2021.

The Company executed the swap agreements to fix a portion of the interest rates on its variable rate debt that have a combined notional amount of $ 12.0 million at July 3, 2021.

Under the swap agreements, the Company receives interest at the one-month LIBOR rate plus 2.25 % and pays a fixed rate.

1 unchanged sentence

The second swap became effective in October 2016 , has a rate of 3.83 % (amortizing notional amount of $ 2.0 million) and expires in May 2022 .

At April 3, 2021, the fair value of the swap agreements was a liability of $ 0.5 million.

At July 3, 2021, the fair value of the swap agreements was a liability of $ 0.4 million.

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

11 unchanged sentences

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

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

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):

Fair Value Measurement

Cash equivalents

1 unchanged sentence

Interest rate swaps

Total liabilities

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Fair Value Measurements and Disclosures – continued

Fair Value Measurement

Cash equivalents

1 unchanged sentence

Interest rate swaps

Total liabilities

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

10 unchanged sentences

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

The carrying value and estimated fair value of these promissory notes at April 3, 2021 is summarized as follows:

The carrying value and estimated fair value of these promissory notes at July 3, 2021 is summarized as follows:

Carrying Value

7 unchanged sentences

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

As of April 3, 2021, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment .

As of July 3, 2021, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment.

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

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

As of April 3, 2021, 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 July 3, 2021, we were not reasonably certain of exercising any renewal or termination options, and as such, no adjustments were made to the right-of-use lease assets or corresponding liabilities.

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

4 unchanged sentences

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

The following table summarizes our lease costs for the thirteen week periods ended April 3, 2021 and April 4, 2020 (in thousands):

April 3, 2021

The following table summarizes our lease costs for the thirteen weeks and twenty-six weeks ended July 3, 2021 and July 4, 2020 (in thousands):

Thirteen weeks ended July 3, 2021

With Affiliates

With Third Parties

Operating lease cost

3 unchanged sentences

Total lease cost

April 4, 2020

Thirteen weeks ended July 4, 2020

With Affiliates

With Third Parties

Operating lease cost

6 unchanged sentences

(8) Leases – continued

The following table summarizes other lease related information as of and for the thirteen week periods ended April 3, 2021 and April 4, 2020 (in thousands):

April 3, 2021

Twenty-six weeks ended July 3, 2021

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

Twenty-six weeks ended July 4, 2020

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

The following table summarizes other lease related information as of and for the twenty-six week periods ended July 3, 2021 and July 4, 2020 (in thousands):

Other information

Cash paid for amounts included in the measurement of

operating leases

Future right-of-use asset change due to lease signed with a future

commencement date

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

lease liabilities

Cash paid for amounts included in the measurement of operating leases

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

Weighted-average remaining lease term (in years)

Weighted-average discount rate

April 4, 2020

Other information

Cash paid for amounts included in the measurement of

operating leases

Cash paid for amounts included in the measurement of operating leases

Right-of-use asset change due to lease termination

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

lease liabilities

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

Weighted-average remaining lease term (in years)

Weighted-average discount rate

Future minimum lease payments under operating leases as of April 3, 2021, 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 July 3, 2021, are as follows (in thousands):

With Affiliates

With Third Parties

Total required lease payments

1 unchanged sentence

Present value of lease liabilities

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Transactions with Affiliates

(“CenTra”), an affiliate of the Company that is owned by our controlling shareholders, provides administrative support services to Universal in the ordinary course of business, including legal, human resources, IT infrastructure and other requested services.

(“CenTra”), an affiliate of the Company that is owned by our controlling shareholder, provides administrative support services to Universal in the ordinary course of business, including legal, human resources, IT infrastructure and other requested services.

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

Universal also purchases other services from affiliates controlled by CenTra.

Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks ended April 3, 2021 and April 4, 2020 (in thousands):

Universal also purchases other services from affiliates owned by our controlling shareholder, including CenTra.

Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks and twenty-six weeks ended July 3, 2021 and July 4, 2020, respectively (in thousands):

Thirteen weeks ended

Twenty-six weeks ended

Administrative support services

3 unchanged sentences

Purchased transportation and equipment rent

We pay CenTra 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.

We pay CenTra and related affiliates 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.

In connection with our transportation services, we also pay tolls and other fees for international bridge crossings to certain related entities which are under common control with CenTra.

We lease 28 facilities from related parties.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Transactions with Affiliates - continued

We also 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.

2 unchanged sentences

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

We purchase workers’ compensation, property and casualty, cargo, warehousing and other general liability insurance from an insurance company controlled by our majority shareholders.

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

Our employee health care benefits and 401(k) programs are also provided by this affiliate.

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

At April 3, 2021 and December 31, 2020, amounts due to affiliates were $ 17.3 million and $ 17.1 million, respectively.

At July 3, 2021 and December 31, 2020, amounts due to affiliates were $ 14.0 million and $ 17.1 million, respectively.

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

At April 3, 2021 and December 31, 2020, there were $ 15.1 million and $ 13.3 million, respectively, included in each of these accounts for insured claims.

At July 3, 2021 and December 31, 2020, there were $ 14.6 million and $ 13.3 million, respectively, included in each of these accounts for insured claims.

We purchased wheels and tires from an affiliate during the twenty-six weeks ended July 4, 2020 totaling $ 618,000 .

There were no such purchases made during the twenty-six weeks ended July 3, 2021.

Services provided by Universal to Affiliates

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

Following is a schedule of services provided to affiliates for the thirteen weeks ended April 3, 2021 and April 4, 2020 (in thousands):

Following is a schedule of services provided to affiliates for the thirteen weeks and twenty-six weeks ended July 3, 2021 and July 4, 2020 (in thousands):

Thirteen weeks ended

Twenty-six weeks ended

Purchased transportation and equipment rent

At April 3, 2021 and December 31, 2020, amounts due from affiliates were $ 1.3 million and $ 1.2 million, respectively.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

At July 3, 2021 and December 31, 2020, amounts due from affiliates were $ 1.0 million and $ 1.2 million, respectively.

Stock Based Compensation

10 unchanged sentences

On February 20, 2019, the Company granted 44,500 shares of restricted stock to certain of its employees, including 10,000 shares to our Chief Financial Officer.

The restricted stock awards have a grant date fair value of $ 23.56 per share, based on the closing price of the Company’s stock, and any non-vested shares under the awards will vest in four equal increments on each February 20 in 2020, 2021, 2022 and 2023.

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

The restricted stock awards have a grant date fair value of $ 23.56 per share, based on the closing price of the Company’s stock, and any non-vested shares under the awards vest in four equal increments on each February 20 in 2020, 2021, 2022 and 2023.

The vesting of restricted stock awards to a grantee may be accelerated under certain conditions, including retirement.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Stock Based Compensation - continued

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

2 unchanged sentences

Non-vested at January 1, 2021

Balance at April 3, 2021

In each of the thirteen-week periods ended April 3, 2021 and April 4, 2020, the total grant date fair value of vested shares recognized as compensation costs was $ 0.2 million.

As of April 3, 2021, there was approximately $ 1.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

Balance at July 3, 2021

In each of the twenty-six week periods ended July 3, 2021 and July 4, 2020, the total grant date fair value of vested shares recognized as compensation costs was $ 0.2 million.

As of July 3, 2021, there was approximately $ 1.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

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

3 unchanged sentences

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

For the thirteen weeks ended April 3, 2021 and April 4, 2020, we included 14,613 and 0 weighted average non-vested shares of restricted stock, respectively, in the denominator for the calculation of diluted earnings per share.

For the thirteen weeks ended April 3, 2021 and April 4, 2020, we excluded 0 and 85,625 shares of non-vested restricted stock, respectively, from the calculation of diluted earnings per share because such shares were anti-dilutive.

On February 4, 2021 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on April 5, 2021 to shareholders of record at the close of business on March 1, 2021 .

For the thirteen weeks and twenty-six weeks ended July 3, 2021, there were 16,704 and 15,689 weighted average non-vested shares of restricted stock, respectively, included in the denominator for the calculation of diluted earnings per share.

For the thirteen weeks and twenty-six weeks ended July 4, 2020, no shares of non-vested restricted stock were included in the denominator for the calculation of diluted earnings per share.

In each of the thirteen weeks and twenty-six weeks ended July 4, 2020, we excluded 85,625 shares of non-vested restricted stock from the calculation of diluted earnings per share because such shares were anti-dilutive.

No such shares were excluded from the calculation of diluted earnings per share during the thirteen weeks or twenty-six weeks ended July 3, 2021.

On April 29, 2021 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on July 6, 2021 to shareholders of record at the close of business on June 7, 2021 .

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.

15 unchanged sentences

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

The following tables summarize information about our reportable segments for the thirteen week period ended April 3, 2021 and April 4, 2020 (in thousands):

The following tables summarize information about our reportable segments for the thirteen week and twenty-six week periods ended July 3, 2021 and July 4, 2020 (in thousands):

Operating Revenues

Thirteen weeks ended

Twenty-six weeks ended

Contract logistics

3 unchanged sentences

Thirteen weeks ended

Twenty-six weeks ended

Contract logistics

Company-managed brokerage

Total eliminated inter-segment revenues

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Segment Reporting - continued

Total operating revenues

Income from Operations

Thirteen weeks ended

Twenty-six weeks ended

Contract logistics

Company-managed brokerage

Total income from operations

Total operating revenues

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Commitments and Contingencies

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

On March 17, 2021, the Company received a complaint from the National Labor Relations Board (the “NLRB”) based on charged alleged by the International Brotherhood of Teamsters against four of the Company’s operating subsidiaries.

The charges stem from the Company’s decision to close underperforming operations in California in December 2019.

The Teamsters allege, among other things, that the Company’s subsidiaries engaged in unfair labor practices and failure to negotiate in good faith and are seeking reinstatement of terminated individuals with back pay.

The gross amount of the claim for back pay is approximately $ 5.9 million.

The amount of the back pay does not, however, take into consideration any of the offsetting earnings made by terminated individuals since their separation from the Company.

In April 2021, the Company answered the complaint by denying it engaged in any unfair labor practices and maintaining that the Company closed the underperforming California terminal due to financial reasons.

In June 2021, the Company participated in the first phase of hearings with the NLRB.

The hearing will be continued in late July and is expected to be completed shortly thereafter.

The Company currently estimates the possible range of financial exposure in the matter to be between $ 0.8 million and $ 5.9 million.

Based on the Company’s best estimate of the liability at this time, the Company has recorded an accrued liability for this matter of $ 1.9 million.

While the outcome of these claims cannot be predicted with any certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations or cash flows.

On June 1, 2021, the Company entered into a settlement agreement with various parties, including a former agent of the Company.

The agreement resolves all breach of contract, tortious interference, and other claims previously asserted by the Company against the defendants.

Under the terms of the agreement, the Company agreed to accept $ 6.0 million in cash payable in three equal tranches of $ 2.0 million on June 21, 2021, September 30, 2021 and December 31, 2021.

As a result of the settlement, during the second quarter 2021, the Company recorded a $ 5.7 million gain in other non-operating income.

On June 9, 2021, the Company received the first payment of $ 2.0 million.

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

2 unchanged sentences

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

At April 3, 2021, approximately 35 % of our employees in the United States, Canada and Colombia, and approximately 86 % of our employees in Mexico were subject to collective bargaining agreements that are renegotiated periodically, 40 % of which are subject to contracts that expire in 2021.

At July 3, 2021, approximately 40 % of our employees in the United States, Canada and Colombia, and 86 % of our employees in Mexico were subject to collective bargaining agreements that are renegotiated periodically, 21 % of which are subject to contracts that expire in 2021.

Subsequent Events

On April 29, 2021 , our Board of Directors declared the regular quarterly cash dividend of $ 0.105 per share of common stock, payable to shareholders of record at the close of business on June 7, 2021 and is expected to be paid on July 6, 2021 .

On July 29, 2021 , our Board of Directors declared the regular quarterly cash dividend of $ 0.105 per share of common stock, payable to shareholders of record at the close of business on September 6, 2021 and is expected to be paid on October 4, 2021 .

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