What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-12 · 125 added, 128 removed, 179 unchanged (59% of the section changed)

35 unchanged sentences

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

The following table sets forth operating revenues resulting from each of these categories for the thirteen weeks and twenty-six weeks ended July 3, 2021 and July 4, 2020, presented as a percentage of total operating revenues:

The following table sets forth operating revenues resulting from each of these categories for the thirteen weeks and thirty-nine weeks ended October 2, 2021 and October 3, 2020, presented as a percentage of total operating revenues:

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

Operating revenues:

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Results of Operations

The following table sets forth items derived from our consolidated statements of income for the thirteen weeks and twenty-six weeks ended July 3, 2021 and July 4, 2020, presented as a percentage of operating revenues:

The following table sets forth items derived from our consolidated statements of income for the thirteen weeks and thirty-nine weeks ended October 2, 2021 and October 3, 2020, presented as a percentage of operating revenues:

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

Operating revenues:

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Income tax expense

Thirteen Weeks Ended July 3, 2021 Compared to Thirteen Weeks Ended July 4, 2020

Thirteen Weeks Ended October 2, 2021 Compared to Thirteen Weeks Ended October 3, 2020

Operating revenues .

Operating revenues for the thirteen weeks ended July 3, 2021 increased $164.8 million, or 63.9%, to $422.8 million from $258.0 million for the thirteen weeks ended July 4, 2020.

Included in operating revenues are separately-identified fuel surcharges of $23.0 million for the thirteen weeks ended July 3, 2021 compared to $12.4 million for the thirteen weeks ended July 4, 2020.

Consolidated income from operations increased $20.5 million, or 188.9%, to $31.3 million for the second quarter 2021 compared to $10.8 million during the same period last year.

Second quarter 2020 results were negatively impacted by the Covid-19 pandemic which resulted in a substantial portion of our customers being shuttered during the quarter.

Second quarter 2021 results include a favorable legal settlement which resulted in a $5.7 million pre-tax gain.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $83.0 million, or 115.6%, to $154.8 million in the second quarter 2021 compared to $71.8 million in the previous year.

Income from operations in the contract logistics segment increased $15.2 million to $15.9 million for the thirteen weeks ended July 3, 2021 compared to $0.8 million in the same period last year.

The improved performance was due to recent program wins and a more stable operating environment.

Second quarter 2020 results were negatively impacted by the shutdown of North American automotive and heavy-duty truck manufacturing due to the Covid-19 pandemic.

In the second quarter of 2021, Universal managed 60 value-added programs compared to 55 in the prior year period.

During the recently completed quarter, dedicated transportation load count increased 170.6% to 156,119 from 57,703 in the second quarter 2020.

Second quarter 2021 results in the contract logistics segment include approximately $5.0 million of losses incurred in connection with a recent program launch.

As a percentage of revenue, operating margin in the contract logistics segment for the second quarter 2021 was 10.3% compared to 1.0% during the same period last year.

In the intermodal segment, operating revenues increased $23.7 million, or 28.6%, to $106.6 million in the second quarter 2021 compared to $82.9 million in the previous year.

Intermodal revenues for the thirteen weeks ended July 3, 2021 included $11.7 million in separately identified fuel surcharges, compared to $8.2 million in the same period last year.

During the second quarter 2021, Universal moved 169,441 intermodal loads compared to 156,779 in the second quarter 2020, an increase of 8.1%, while its average operating revenue per load, excluding fuel surcharges, increased 5.8% to $490 from $463.

Additionally, assessorial and other non-line haul charges increased $5.9 million during the second quarter 2021.

Income from operations in the intermodal segment increased $1.4 million to $6.2 million for the thirteen weeks ended July 3, 2021 compared to $4.7 million in the second quarter 2020.

As a percentage of revenue, operating margin in the intermodal segment increased to 5.8% compared to 5.7% in the second quarter of 2020.

In the trucking segment, which includes agent-based and company-managed trucking operations, operating revenues increased $36.8 million to $99.8 million in the second quarter 2021 compared to $63.0 million in the prior year period.

Included in trucking segment revenues for the second quarter 2021 were $6.0 million in separately identified fuel surcharges compared to $2.9 million during the second quarter 2020.

Income from operations in the trucking segment increased $2.9 million to $6.5 million for the second quarter 2021 compared to $3.6 million in the same period last year.

Operating revenues for the thirteen weeks ended October 2, 2021 increased $80.6 million, or 22.1%, to $445.6 million from $365.0 million for the thirteen weeks ended October 3, 2020.

Included in operating revenues are separately-identified fuel surcharges of $24.9 million for the thirteen weeks ended October 2, 2021 compared to $16.4 million for the thirteen weeks ended October 3, 2020.

Consolidated income from operations decreased $5.3 million, or 24.2%, to $16.7 million for the third quarter 2021 compared to $22.1 million during the same period last year.

Results for the thirteen weeks ended October 2, 2021 include $5.8 million in litigation related charges and $7.1 million of losses incurred in connection with a recent contract logistics program launch.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $29.2 million, or 22.9%, to $156.9 million in the third quarter 2021 compared to $127.7 million in the previous year.

At the end of the third quarter 2021, Universal managed 61 value-added programs, compared to 57 programs at the end of the third quarter 2020.

During the recently completed quarter, dedicated transportation load count decreased 14.7% to 137,127 from 160,694 in the third quarter 2020.

Income from operations in the contract logistics segment decreased $5.6 million to $6.0 million for the thirteen weeks ended October 2, 2021 compared to $11.6 million in the same period last year.

Third quarter 2021 results in the contract logistics segment include $7.1 million of losses incurred in connection with a previously announced program launch.

As a percentage of revenue, operating margin in the contract logistics segment for the third quarter 2021 was 3.8% compared to 9.1% during the same period last year.

Recent program awards were the primary drivers for increased revenue;

however, lost production due to chip shortages, labor constraints, and an unfavorable operating environment led to compressed margins during the third quarter 2021.

In the intermodal segment, operating revenues increased $26.5 million, or 28.0%, to $121.0 million in the third quarter 2021 compared to $94.5 million in the previous year.

Intermodal revenues for the thirteen weeks ended October 2, 2021 included $13.2 million in separately identified fuel surcharges, compared to $9.4 million in the same period last year.

During the third quarter 2021, Universal moved 159,428 intermodal loads compared to 182,803 in the third quarter 2020, a decrease of 12.8%, while its average operating revenue per load, excluding fuel surcharges, increased 20.9% to $537 from $444.

Additionally, other assessorial charges such as detention, demurrage and storage increased $13.4 million during the third quarter 2021.

Income from operations in the intermodal segment decreased $6.9 million to $1.9 million for the thirteen weeks ended October 2, 2021 compared to $8.8 million in the third quarter 2020.

Intermodal segment results included litigation related charges totaling $5.8 million in the third quarter 2021.

As a percentage of revenue, operating margin in the intermodal segment decreased to 1.6% compared to 9.4% in the third quarter of 2020.

In the trucking segment, which includes agent-based and company-managed trucking operations, operating revenues increased $24.2 million to $107.2 million in the third quarter 2021 compared to $82.9 million in the prior year period.

Included in trucking segment revenues for the third quarter 2021 were $6.5 million in separately identified fuel surcharges compared to $3.6 million during the third quarter 2020.

Income from operations in the trucking segment increased $2.1 million to $6.8 million for the third quarter 2021 compared to $4.8 million in the same period last year.

During the recently completed quarter, load volumes increased 12.4% to 72,549 loads compared to 64,552 during the same period last year.

Universal’s average operating revenue per load, excluding fuel surcharges, also increased 13.6% to $1,417 from $1,247 in the prior year period.

As a percentage of revenue, operating margin in the trucking segment for the second quarter 2021 was 6.5% compared to 5.7% for the second quarter 2020.

In the company-managed brokerage segment, operating revenues increased $20.5 million, or 51.3%, to $60.4 million in the thirteen weeks ending July 3, 2021 compared to $39.9 million in the thirteen weeks ending July 4, 2020.

Income from operations in the company-managed brokerage segment increased $0.7 million to $2.4 million for the second quarter 2021 from $1.7 million for the second quarter 2020.

Average operating revenue per load, excluding fuel surcharges, increased 71.4% to $1,879 in the second quarter 2021 from $1,096 in the second quarter 2020.

As a percentage of revenue, operating margin in the trucking segment for the third quarter 2021 was 6.4% compared to 5.8% for the third quarter 2020.

In the company-managed brokerage segment, operating revenues decreased $0.4 million, or 0.6%, to $59.2 million in the thirteen weeks ending October 2, 2021 compared to $59.6 million in the thirteen weeks ending October 3, 2020.

Income from operations in the company-managed brokerage segment increased $5.0 million to $1.8 million for the third quarter 2021 from an operating loss of $3.2 million for the third quarter 2020.

Average operating revenue per load, excluding fuel surcharges, increased 18.9% to $1,808 in the third quarter 2021 from $1,521 in the third quarter 2020.

Company-managed brokerage load volumes decreased 17.4% to 30,619 from 37,079.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 4.0% for the second quarter 2021 compared to 4.3% in the same period last year.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 3.0% for the third quarter 2021 compared to (5.4%) in the same period last year.

Purchased transportation and equipment rent .

Purchased transportation and equipment rental costs for the second quarter 2021 increased $69.4 million, or 54.0%, to $198.0 million from $128.6 million during the same period last year.

Purchased transportation and equipment rental costs for the third quarter 2021 increased $35.7 million, or 20.1%, to $212.9 million from $177.2 million during the same period last year.

Purchased transportation and equipment rent generally increases or decreases in proportion to the revenues generated through owner-operators and other third party providers, and is generally correlated with changes in demand for transportation-related services, which includes truckload, brokerage, intermodal and to a lesser extent, dedicated services, which uses a higher mix of company-drivers compared to owner-operators.

The absolute increase in purchased transportation and equipment rental costs was primarily the result of an increase in transportation-related service revenues.

Second quarter 2021 transportation-related service revenues increased 55.9% compared to the second quarter of 2020.

Third quarter 2021 transportation-related service revenues increased 23.0% compared to the third quarter of 2020.

As a percentage of operating revenues, purchased transportation and equipment rent expense decreased to 47.8% compared to 48.6% during the same period last year.

The decrease was due to a decrease in the mix of transportation-related service revenue.

As a percentage of total revenues, transportation-related service revenue decreased to 75.3% for the thirteen weeks ended July 3, 2021 compared to 79.2% in the same period last year.

The decrease was due to a decrease in the mix of brokerage services revenue, where the cost of transportation is typically higher than our other transportation businesses.

As a percentage of total revenues, brokerage services revenue decreased to 22.9% for the thirteen weeks ended October 2, 2021 compared to 24.8% in the same period last year.

Direct personnel and related benefits .

Direct personnel and related benefits for the thirteen weeks ended July 3, 2021 increased by $53.4 million, or 92.7%, to $111.0 million compared to $57.6 million during the same period last year.

Direct personnel and related benefits for the thirteen weeks ended October 2 , 2021 increased by $29.5 million, or 33.2%, to $118.4 million compared to $88.9 million during the same period last year.

Trends in these expenses are generally correlated with changes in operating facilities and headcount requirements and, therefore, increase and decrease with the level of demand for our value-added services and staffing needs of our operations.

The increase was due to the launch of new business wins and robust volumes in our contract logistics segment in 2021, as well as the impact of temporary layoffs and furloughs in 2020 in response to the Covid-19 pandemic.

As a percentage of operating revenues, personnel and related benefits increased to 26.3% for the thirteen weeks ended July 3, 2021, compared to 22.3% for the thirteen weeks ended July 4, 2020.

The increase was due to the launch of new business wins as well as the impact of temporary layoffs and furloughs in 2020 in response to the Covid-19 pandemic.

As a percentage of operating revenues, personnel and related benefits increased to 26.6% for the thirteen weeks ended October 2 , 2021, compared to 24.4% for the thirteen weeks ended October 3 , 2020.

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

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Operating supplies and expenses .

Operating supplies and expenses increased by $15.8 million, or 92.9%, to $32.7 million for the thirteen weeks ended July 3, 2021 compared to $17.0 million for the thirteen weeks ended July 4, 2020.

Operating supplies and expenses increased by $12.8 million, or 41.3%, to $43.8 million for the thirteen weeks ended October 2, 2021 compared to $31.0 million for the thirteen weeks ended October 3, 2020.

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

The main elements of the increase included increases of $8.9 million in fuel expense, $3.3 million in vehicle and other maintenance, $2.3 million in operating supplies and material costs in operations supporting heavy-truck programs, and $1.7 million in travel and entertainment.

The main elements of the increase included increases of $8.7 million in fuel expense, $4.9 million in legal charges and professional fees, $2.0 million in vehicle and other maintenance, and $1.8 million in travel and entertainment.

Commission expense .

Commission expense for the second quarter 2021 increased by $3.5 million, or 70.6%, to $8.6 million from $5.0 million for the second quarter 2020.

Commission expense for the third quarter 2021 increased by $2.3 million, or 34.5%, to $9.1 million from $6.8 million for the third quarter 2020.

Commission expense increased due to increased revenue in the agency based truckload business.

As a percentage of operating revenues, commission expense increased to 2.0% for the thirteen weeks ending July 3, 2021, compared to 1.9% one year earlier.

As a percentage of operating revenues, commission expense increased to 2.0% for the thirteen weeks ending October 2, 2021, compared to 1.9% one year earlier.

Occupancy expense .

Occupancy expenses increased by $0.4 million, or 4.5%, to $9.4 million for the thirteen weeks ended July 3, 2021.

This compares to $9.0 million for the thirteen weeks ended July 4, 2020.

Occupancy expenses increased by $0.7 million, or 7.6%, to $9.3 million for the thirteen weeks ended October 2, 2021.

This compares to $8.7 million for the thirteen weeks ended October 3, 2020.

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

General and administrative .

General and administrative expense for the thirteen weeks ended July 3, 2021 increased by $3.1 million to $9.7 million from $6.6 million in the thirteen weeks ended July 4, 2020.

The increase was attributable to a $2.8 million increase in salaries, wages, and benefits and a $0.2 million increase in professional fees.

As a percentage of operating revenues, general and administrative expense was 2.3% for the second quarter 2021 compared to 2.6% for the second quarter 2020.

General and administrative expense for the thirteen weeks ended October 2, 2021 increased by $2.4 million to $11.0 million from $8.6 million in the thirteen weeks ended October 3, 2020.

The increase was attributable to a $0.9 million increase in salaries, wages, and benefits, a $0.8 million increase in professional fees, and a $0.6 million increase in other general and administrative expenses.

As a percentage of operating revenues, general and administrative expense was 2.5% for the third quarter 2021 compared to 2.4% for the third quarter 2020.

Insurance and claims .

Insurance and claims expense for the second quarter 2021 increased by $0.9 million to $5.7 million from $4.9 million in the second quarter 2020.

The increase was attributable to an increase in auto liability premiums and claims.

As a percentage of operating revenues, insurance and claims decreased to 1.4% for the thirteen weeks ending July 3, 2021 compared to 1.9% for the second quarter 2020.

Insurance and claims expense for the third quarter 2021 increased by $3.0 million to $7.9 million from $4.9 million in the third quarter 2020.

The increase was attributable to an increase in auto liability premiums and cargo and service failure claims.

As a percentage of operating revenues, insurance and claims increased to 1.8% for the thirteen weeks ending October 2, 2021 compared to 1.3% for the third quarter 2020.

Depreciation and amortization .

Depreciation and amortization expense for the thirteen weeks ended July 3, 2021 decreased by $2.2 million, or 11.8%, to $16.3 million from $18.5 million for the second quarter 2020.

Depreciation expense decreased $1.7 million and amortization expense decreased $0.5 million.

Depreciation and amortization expense for the thirteen weeks ended October 2, 2021 decreased by $0.4 million, or 2.6%, to $16.5 million from $16.9 million for the third quarter 2020.

Depreciation expense decreased $0.6 million and amortization expense increased $0.2 million.

Interest expense, net .

Net interest expense was $2.9 million for the thirteen weeks ended July 3, 2021 compared to $3.4 million for the thirteen weeks ended July 4, 2020.

Net interest expense was $3.0 million for the thirteen weeks ended October 2, 2021 compared to $3.5 million for the thirteen weeks ended October 3, 2020.

The decrease in net interest expense reflects a decrease in interest rates on our outstanding borrowings.

As of July 4, 2021, our outstanding borrowings totaled $433.5 million compared to $405.6 million at the same time last year.

As of October 2, 2021, our outstanding borrowings totaled $444.8 million compared to $468.3 million at the same time last year.

Other non-operating income (expense) .

Other non-operating income was $6.1 million for the second quarter 2021 compared to $0.8 million for the second quarter 2020.

Other non-operating income for the second quarter 2021 includes a $5.7 million pre-tax gain from a favorable legal settlement.

Also included in other non-operating income for the second quarter 2021 was a $0.4 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income compared to $0.9 million in the second quarter 2020.

Other non-operating expense was $0.1 million for the third quarter 2021 compared to other non-operating expense of $0.5 million for the third quarter 2020.

Included in other non-operating income for the third quarter 2021 was a $0.1 million pre-tax holding loss on marketable securities due to changes in fair value recognized in income compared to a $0.5 million pre-tax holding loss on marketable securities in the third quarter 2020.

Income tax expense .

Income tax expense for the second quarter 2021 was $8.9 million, compared to $2.0 million for the second quarter 2020, based on an effective tax rate of 25.7% and 24.9% respectively.

The increase in income taxes in 2021 is the result of an increase in taxable income and our effective tax rate for the thirteen weeks ended July 3, 2021 compared to the thirteen weeks ended July 4, 2020.

Twenty-six Weeks Ended July 3, 2021 Compared to Twenty-six Weeks Ended July 4, 2020

Income tax expense for the third quarter 2021 was $3.3 million, compared to $4.5 million for the third quarter 2020, based on an effective tax rate of 24.5% and 24.8% respectively.

The decrease in income taxes in 2021 is the result of a decrease in taxable income and our effective tax rate for the thirteen weeks ended October 2, 2021 compared to the thirteen weeks ended October 3, 2020.

Thirty-nine Weeks Ended October 2 , 2021 Compared to Thirty-nine Weeks Ended October 3 , 2020

Operating revenues .

Operating revenues for the twenty-six weeks ended July 3, 2021 increased $197.9 million, or 30.9%, to $838.0 million from $640.1 million for the twenty-six weeks ended July 4, 2020.

Included in operating revenues are separately-identified fuel surcharges of $43.1 million for the twenty-six weeks ended July 3, 2021 compared to $35.4 million for the twenty-six weeks ended July 4, 2020.

Consolidated income from operations increased $27.7 million, or 79.8%, to $62.5 million for the first half of 2021 compared to $34.7 million during the same period last year.

Results for the twenty-six weeks ended July 4, 2020 were negatively impacted by the Covid-19 pandemic which resulted in a substantial portion of our customers being shuttered.

Results for the twenty-six weeks ended July 3, 2021 include a favorable legal settlement which resulted in a $5.7 million pre-tax gain.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $110.8 million, or 55.7%, to $309.7 million in the first half of 2021 compared to $198.8 million in the previous year.

Income from operations in the contract logistics segment increased $20.3 million, or 163.4%, to $32.8 million for the twenty-six weeks ended July 3, 2021 compared to $12.4 million in the same period last year.

The improved performance was due to recent program wins and a more stable operating environment.

First half 2020 results were negatively impacted by the shutdown of North American automotive and heavy-duty truck manufacturing due to the Covid-19 pandemic.

In the first half of 2021, Universal managed 60 value-added programs compared to 55 in the prior year period.

During the twenty-six weeks ended July 3, 2021, dedicated transportation load count increased 58.5% to 312,494 from 197,218 in the first half of 2020.

Second quarter 2021 results in the contract logistics segment include approximately $6.8 million of losses incurred in connection with a recent program launch.

As a percentage of revenue, operating margin for the contract logistics segment for the twenty-six weeks ended July 3, 2021 was 10.6% compared to 6.3% during the same period last year.

In the intermodal segment, operating revenues increased $17.1 million to $210.3 million in the first half of 2021 compared to $193.2 million in the previous year.

Intermodal revenues for the twenty-six weeks ended July 3, 2021 included $21.9 million in separately identified fuel surcharges, compared to $21.8 million in the same period last year.

During the first half of 2021, Universal moved 348,924 intermodal loads compared to 354,562 in the first half of 2020, a decrease of 1.6%, while its average operating revenue per load, excluding fuel surcharges increased 1.9% to $483 from $474.

Additionally, assessorial and other non-line haul charges increased $12.3 million during the twenty-six weeks ended July 3, 2021.

Income from operations in the intermodal segment increased $0.9 million to $14.6 million for the twenty-six weeks ended July 3, 2021 compared to $13.7 million in the first half of 2020.

As a percentage of revenue, operating margin in the intermodal segment was 7.0% in the twenty-six weeks ended July 3, 2021 compared to 7.1% in the prior year period.

In the trucking segment, which includes agent-based and company-managed trucking operations, operating revenues increased $40.1 million to $194.7 million in the first half of 2021 compared to $154.6 million in the prior year period.

Included in trucking segment revenues for the first half of 2021 were $11.1 million in separately identified fuel surcharges compared to $8.8 million during the first half of 2020.

Income from operations in the trucking segment increased $3.6 million to $11.7 million for the twenty-six weeks ended July 3, 2021 compared to $8.1 million in the same period last year.

During the twenty-six weeks ended July 3, 2021, load volumes increased 16.4% to 148,389 loads compared to 127,438 in the first half of 2020.

Operating revenues for the thirty-nine weeks ended October 2, 2021 increased $278.5 million, or 27.7%, to $1,283.6 million from $1,005.1 million for the thirty-nine weeks ended October 3, 2020.

Included in operating revenues are separately-identified fuel surcharges of $68.0 million for the thirty-nine weeks ended October 2, 2021 compared to $51.9 million for the thirty-nine weeks ended October 3, 2020.

Consolidated income from operations increased $22.4 million, or 39.4%, to $79.2 million for the first three quarters of 2021 compared to $56.8 million during the same period last year.

Results for the thirty-nine weeks ended October 3, 2020 were negatively impacted by the Covid-19 pandemic which resulted in a substantial portion of our customers being shuttered.

Results for the thirty-nine weeks ended October 2, 2021 include a favorable legal settlement which resulted in a $5.7 million pre-tax gain, $7.6 million in legal charges, and $13.9 million of losses incurred in connection with a recent contract logistics program launch.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $140.1 million, or 42.9%, to $466.6 million in the thirty-nine weeks ended October 2, 2021 compared to $326.5 million in the previous year.

Income from operations in the contract logistics segment increased $14.7 million, or 61.3%, to $38.7 million for the thirty-nine weeks ended October 2, 2021 compared to $24.0 million in the same period last year.

In the thirty-nine weeks ended October 2, 2021, Universal managed 61 value-added programs compared to 57 in the prior year period.

During the thirty-nine weeks ended October 2, 2021, dedicated transportation load count increased 25.6% to 449,621 from 357,912 in the thirty-nine weeks ended October 3, 2020.

Results for the thirty-nine weeks ended October 2, 2021 in the contract logistics segment include approximately $13.9 million of losses incurred in connection with a recent program launch.

Results in the contract logistics segment for the thirty-nine weeks ended October 3, 2020 were negatively impacted by the Covid-19 pandemic which resulted in a substantial portion of our customers being shuttered As a percentage of revenue, operating margin for the contract logistics segment for the thirty-nine weeks ended October 2, 2021 was 8.3% compared to 7.4% during the same period last year.

In the intermodal segment, operating revenues increased $43.6 million to $331.3 million in the thirty-nine weeks ending October 2, 2021 compared to $287.7 million in the previous year.

Intermodal revenues for the thirty-nine weeks ended October 2, 2021 included $35.2 million in separately identified fuel surcharges, compared to $31.2 million in the same period last year.

During the thirty-nine weeks ending October 2, 2021, Universal moved 508,352 intermodal loads compared to 537,365 in the thirty-nine weeks ending October 3, 2020, a decrease of 5.4%, while its average operating revenue per load, excluding fuel surcharges increased 7.8% to $500 from $464.

In the thirty-nine weeks ending October 2, 2021 other accessorial charges such as detention, demurrage and storage increased $29.3 million from the same period last year.

Income from operations in the intermodal segment decreased $6.0 million to $16.6 million for the thirty-nine weeks ended October 2, 2021 compared to $22.6 million in the thirty-nine weeks ending October 3, 2020.

Intermodal segment results included litigation related charges totaling $7.6 million in the third quarter 2021.

As a percentage of revenue, operating margin in the intermodal segment was 5.0% in the thirty-nine weeks ended October 2, 2021 compared to 7.8% in the prior year period.

In the trucking segment, which includes agent-based and company-managed trucking operations, operating revenues increased $64.3 million to $301.8 million in the thirty-nine weeks ending October 2, 2021 compared to $237.5 million in the prior year period.

Included in trucking segment revenues for the thirty-nine weeks ending October 2, 2021 were $17.6 million in separately identified fuel surcharges compared to $12.4 million during the thirty-nine weeks ending October 3, 2020.

Income from operations in the trucking segment increased $5.6 million to $18.5 million for the thirty-nine weeks ended October 2, 2021 compared to $12.9 million in the same period last year.

During the thirty-nine weeks ended October 2, 2021, load volumes increased 15.1% to 220,938 loads compared to 191,990 in the thirty-nine weeks ending October 3, 2020.

Average operating revenue per load, excluding fuel surcharges, also increased 8.8% to $1,319 from $1,212 in the prior year period.

As a percentage of revenue, operating margin in the trucking segment was 6.0% in the first half of 2021 compared to 5.2% in the same period last year.

In the company-managed brokerage segment, operating revenues increased $28.8 million, or 31.1%, to $121.5 million in the twenty-six weeks ending July 3, 2021 compared to $92.7 million in the twenty-six weeks ending July 4, 2020.

As a percentage of revenue, operating margin in the trucking segment was 6.1% in the thirty-nine weeks ending October 2, 2021 compared to 5.4% in the same period last year.

In the company-managed brokerage segment, operating revenues increased $28.5 million, or 18.7%, to $180.8 million in the thirty-nine weeks ending October 2, 2021 compared to $152.3 million in the thirty-nine weeks ending October 3, 2020.

Company-managed brokerage load volumes decreased 15.3% to 94,510 from 111,622.

However, average operating revenue per load, excluding fuel surcharges, increased 55.0% to $1,806 in the first half of 2021 from $1,165 in the first half of 2020.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 2.4% for the first half of 2021 compared to 0.3% in the same period last year.

However, average operating revenue per load, excluding fuel surcharges, increased 40.7% to $1,807 in the thirty-nine weeks ending October 2, 2021 from $1,284 in the thirty-nine weeks ending October 3, 2020.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 2.6% for the thirty-nine weeks ending October 2, 2021 compared to (1.9%) in the same period last year.

Purchased transportation and equipment rent .

Purchased transportation and equipment rental costs for the first half of 2021 increased $77.9 million, or 25.2%, to $387.4 million from $309.5 million during the same period last year.

Purchased transportation and equipment rental costs for the thirty-nine weeks ending October 2 , 2021 increased $113.6 million, or 23.3%, to $600.3 million from $486.7 million during the same period last year.

The absolute increase in purchased transportation and equipment rental costs was primarily the result of an increase in transportation-related service revenues.

In the first half of 2021, transportation-related service revenues increased 27.7% compared to the first half of 2020.

In the thirty-nine weeks ended October 2 , 2021, transportation-related service revenues increased 26.0% compared to the thirty-nine weeks ended October 3 , 2020.

As a percentage of operating revenues, purchased transportation and equipment rent expense decreased to 46.8% compared to 48.4% during the same period last year.

The decrease was due to a decrease in the mix of transportation-related service revenue.

As a percentage of total revenues, transportation-related service revenue decreased to 74.8% for the twenty-six weeks ended July 3, 2021 compared to 76.7% in the same period last year.

As a percentage of total revenues, transportation-related service revenue decreased to 75.3% for the thirty-nine weeks ended October 2 , 2021 compared to 76.4% in the same period last year.

Direct personnel and related benefits .

Direct personnel and related benefits for the twenty-six weeks ended July 3, 2021 increased by $63.6 million, or 41.0%, to $218.6 million compared to $155.0 million during the same period last year.

Direct personnel and related benefits for the thirty-nine weeks ended October 2, 2021 increased by $93.1 million, or 38.2%, to $336.9 million compared to $243.9 million during the same period last year.

As a percentage of operating revenues, personnel and related benefits increased to 26.1% for the twenty-six weeks ended July 3, 2021, compared to 24.2% for the twenty-six weeks ended July 4, 2020.

As a percentage of operating revenues, personnel and related benefits increased to 26.2% for the thirty-nine weeks ended October 2, 2021, compared to 24.3% for the thirty-nine weeks ended October 3, 2020.

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

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Operating supplies and expenses .

Operating supplies and expenses increased by $22.1 million, or 46.5%, to $69.8 million for the twenty-six weeks ended July 3, 2021 compared to $47.7 million for the twenty-six weeks ended July 4, 2020.

Operating supplies and expenses increased by $35.0 million, or 44.4%, to $113.6 million for the thirty-nine weeks ended October 2, 2021 compared to $78.7 million for the thirty-nine weeks ended October 3, 2020.

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

The main elements of the increase included increases of $11.3 million in fuel expense, $4.5 million in vehicle and other maintenance, $3.0 million in operating supplies and material costs in operations supporting heavy-truck programs, $2.0 million in travel and entertainment, and $1.8 million in professional fees.

The main elements of the increase included increases of $19.9 million in fuel expense, $6.6 million in legal charges and professional fees, $6.6 million in vehicle and other maintenance, $3.8 million in travel and entertainment, and $1.2 million in operating supplies and material costs in operations supporting heavy-truck programs.

Commission expense .

Commission expense for the first half 2021 increased by $3.7 million, or 30.3%, to $15.9 million from $12.2 million for the first half of 2020.

Commission expense for the thirty-nine weeks ended October 2, 2021 increased by $6.0 million, or 31.8%, to $25.0 million from $19.0 million for the thirty-nine weeks ended October 3, 2020.

Commission expense increased due to increased revenue in the agency based truckload business.

As a percentage of operating revenues, commission expense was unchanged at 1.9% for the twenty-six weeks ending July 3, 2021.

As a percentage of operating revenues, commission expense was unchanged at 1.9% for both the thirty-nine weeks ending October 2, 2021 and October 3, 2020.

Occupancy expense .

Occupancy expenses decreased by $0.2 million, or 1.4%, to $17.6 million for the twenty-six weeks ended July 3, 2021.

This compares to $17.8 million for the twenty-six weeks ended July 4, 2020.

The decrease was primarily attributable to a decrease in building rents as we consolidated facilities for certain value-added programs.

Occupancy expenses increased by $0.4 million, or 1.6%, to $26.9 million for the thirty-nine weeks ended October 2, 2021.

This compares to $26.5 million for the thirty-nine weeks ended October 3, 2020.

The increase was primarily attributable to an increase in property taxes.

General and administrative .

General and administrative expense for the twenty-six weeks ended July 3, 2021 increased by $3.4 million to $18.9 million from $15.5 million in the twenty-six weeks ended July 4, 2020.

General and administrative expense for the thirty-nine weeks ended October 2, 2021 increased by $5.8 million to $29.9 million from $24.1 million in the thirty-nine weeks ended October 3, 2020.

The increase was attributable to a $4.1 million increase in salaries, wages, and benefits and a $1.4 million increase in professional fees.

As a percentage of operating revenues, general and administrative expense was 2.3% for the first half of 2021 compared to 2.4% for the first half of 2020.

As a percentage of operating revenues, general and administrative expense was 2.3% for the thirty-nine weeks ended October 2, 2021 compared to 2.4% for the thirty-nine weeks ended October 3, 2020.

Insurance and claims .

Insurance and claims expense for the first half of 2021 increased by $2.3 million to $12.1 million from $9.7 million in the first half of 2020.

The increase was attributable to increases of $1.6 million in cargo and service failure claims, $0.6 million in auto liability premiums and $0.2 million in contractor insurance.

As a percentage of operating revenues, insurance and claims decreased to 1.4% for the twenty-six weeks ending July 3, 2021 compared to 1.5% for the first half of 2020.

Insurance and claims expense for the thirty-nine weeks ended October 2, 2021 increased by $5.3 million to $20.0 million from $14.7 million in the thirty-nine weeks ended October 3, 2020.

The increase was attributable to increases of $4.0 million in cargo and service failure claims and $1.4 million in auto liability premiums and claims.

As a percentage of operating revenues, insurance and claims increased to 1.6% for the thirty-nine weeks ending October 2, 2021 compared to 1.5% for the thirty-nine weeks ended October 3, 2020.

Depreciation and amortization .

Depreciation and amortization expense for the twenty-six weeks ended July 3, 2021 decreased by $2.6 million, or 6.9%, to $35.4 million from $38.0 million for 2020.

Depreciation and amortization expense for the thirty-nine weeks ended October 2, 2021 decreased by $3.1 million, or 5.6%, to $51.9 million from $54.9 million for 2020.

Depreciation expense decreased $2.1 million and amortization expense decreased $0.9 million.

Interest expense, net .

Net interest expense was $6.1 million for the twenty-six weeks ended July 3, 2021 compared to $7.6 million for the twenty-six weeks ended July 4, 2020.

Net interest expense was $9.1 million for the thirty-nine weeks ended October 2, 2021 compared to $11.2 million for the thirty-nine weeks ended October 3, 2020.

The decrease in net interest expense reflects a decrease in interest rates on our outstanding borrowings.

As of July 4, 2021, our outstanding borrowings totaled $433.5 million compared to $405.6 million at the same time last year.

As of October 2, 2021, our outstanding borrowings totaled $444.8 million compared to $468.3 million at the same time last year.

Other non-operating income (expense) .

Other non-operating income was $7.1 million for the first half 2021 compared to $2.8 million of other non-operating expense for the first half 2020.

Other non-operating income for the first half of 2021 includes a $5.7 million pre-tax gain from a favorable legal settlement.

Other non-operating income for the twenty-six weeks ended July 3, 2021 includes a $1.4 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income compared to a pre-tax holding loss of $2.5 million in the twenty-six weeks ended July 4, 2020.

Other non-operating income was $7.0 million for the thirty-nine weeks ended October 2, 2021 compared to $3.3 million of other non-operating expense for the thirty-nine weeks ended October 3, 2020.

Other non-operating income for thirty-nine weeks ended October 2, 2021 includes a $5.7 million pre-tax gain from a favorable legal settlement.

Other non-operating income for the thirty-nine weeks ended October 2, 2021 also includes a $1.2 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income compared to a pre-tax holding loss of $3.0 million in the thirty-nine weeks ended October 3, 2020.

Income tax expense .

Income tax expense for the first half of 2021 was $16.2 million, compared to $6.0 million for the first half of 2020, based on an effective tax rate of 25.5% and 24.6% respectively.

The increase in income taxes in 2021 is the result of an increase in taxable income and our effective tax rate for the twenty-six weeks ended July 3, 2021 compared to the twenty-six weeks ended July 4, 2020.

Income tax expense for the thirty-nine weeks ended October 2, 2021 was $19.5 million, compared to $10.5 million for the thirty-nine weeks ended October 3, 2020, based on an effective tax rate of 25.3% and 24.7% respectively.

The increase in income taxes in 2021 is the result of an increase in taxable income and our effective tax rate for the thirty-nine weeks ended October 2, 2021 compared to the thirty-nine weeks ended October 3, 2020.

Liquidity and Capital Resources

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

During the twenty-six weeks ended July 3, 2021, our capital expenditures totaled $16.9 million.

During the thirty-nine weeks ended October 2, 2021, our capital expenditures totaled $26.2 million.

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

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The Board of directors did not declare a special dividend in the first quarter of 2021.

On July 29, 2021, our Board of Directors did declare the regular quarterly cash dividend of $0.105 per share of common stock payable October 4, 2021 to shareholders of record at the close of business September 6, 2021.

On October 28, 2021, our Board of Directors declared the regular quarterly cash dividend of $0.105 per share of common stock payable December 6, 2021 to shareholders of record at the close of business January 4, 2022.

During the first half of 2020, our Board of Directors temporarily suspended the Company’s cash dividend policy due to the uncertainty caused by the Covid-19 pandemic.

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Our Credit Facility includes an accordion feature which allows us to increase availability by up to $100 million upon our request.

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

At October 2, 2021, we were in compliance with all covenants under the Credit Facility, and $27.8 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, include certain affirmative and negative covenants, are generally payable in 60 monthly installments and bear interest at fixed rates ranging from 2.

25 % to 5.13%.

A wholly owned subsidiary issued a series of promissory notes in order to finance certain purchases of real property (the “Real Estate Financing”).

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

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

At October 2, 2021, we were in compliance with all covenants.

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

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

We did not have any amounts advanced against the line as of July 3, 2021, and the maximum available borrowings were $4.2 million.

We did not have any amounts advanced against the line as of October 2, 2021, and the maximum available borrowings were $4.2 million.

Discussion of Cash Flows

At July 3, 2021, we had cash and cash equivalents of $13.1 million compared to $8.8 million at December 31, 2020.

Operating activities provided $53.5 million in net cash, and we used $36.7 million in financing activities and $13.1 million in investing activities.

At October 2, 2021, we had cash and cash equivalents of $13.1 million compared to $8.8 million at December 31, 2020.

Operating activities provided $53.7 million in net cash, and we used $21.1 million in investing activities and $28.2 million in financing activities.

The $53.7 million in net cash provided by operations was primarily attributed to $57.5 million of net income, which reflects non-cash depreciation and amortization, noncash lease expense, gain on marketable equity securities, gains on equipment sales, amortization of debt issuance costs, stock-based compensation, and provisions for doubtful accounts totaling $74.2 million, net.

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These uses were partially offset by $5.1 million in proceeds from the sale of equipment and $0.1 million in proceeds from the sale of marketable securities.

We used $36.7 million in financing activities during the twenty-six weeks ended July 3, 2021.

We used $28.2 million in financing activities during the thirty-nine weeks ended October 2, 2021.

During the period we paid cash dividends of $11.3 million.

We had outstanding borrowings totaling $433.5 million at July 3, 2021 compared to $461.7 million at December 31, 2020.

During the period we made net repayments on our revolving lines of credit totaling $0.9 million and term loan, and equipment and real estate note payments totaling $31.3 million.

We also borrowed $3.9 million for new equipment during the period.

We had outstanding borrowings totaling $444.8 million at October 2, 2021 compared to $461.7 million at December 31, 2020.

During the period we had net borrowings on our revolving lines of credit totaling $20.9 million and borrowed an additional $8.3 million for new equipment.

We also made term loan, and equipment and real estate note payments totaling $46.1 million during the period.

Off Balance Sheet Arrangements

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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, 2020.

There have been no changes in our accounting policies during the thirteen weeks ended July 3, 2021.

There have been no changes in our accounting policies during the thirteen weeks ended October 2, 2021.

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

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have not been any material changes to the Company’s market risk during the thirteen weeks ended July 3, 2021.

There have not been any material changes to the Company’s market risk during the thirteen weeks ended October 2, 2021.

For additional information, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

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 2. Management’s Discussion and Analysis