What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2021-11-12 · 123 added, 159 removed, 408 unchanged (41% of the section changed)

41 unchanged sentences

Treasury stock, at cost;

4,067,247 shares

4,324,508 and 4,067,247 shares, respectively

Retained earnings

Accumulated other comprehensive (loss):

Accumulated other comprehensive income (loss):

Interest rate swaps, net of income taxes of $ 22 and $( 60 ), respectively

7 unchanged sentences

Thirteen Weeks Ended

Thirty-nine Weeks Ended

Operating revenues:

18 unchanged sentences

Interest expense

Other non-operating income (expense)

Other non-operating income

Income before income taxes

8 unchanged sentences

Thirteen Weeks Ended

Thirty-nine Weeks Ended

Other comprehensive income (loss):

Unrealized changes in fair value of interest rate swaps,

net of income taxes of $ 17 , $ 14 , $ 52 and $( 132 ), respectively

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

$ 82 and $ 33 , respectively

Foreign currency translation adjustments

5 unchanged sentences

(In thousands)

Thirty-nine Weeks Ended

Thirteen Weeks Ended

Cash flows from operating activities:

2 unchanged sentences

Noncash lease expense

(Gain) loss on marketable equity securities

Gain on marketable equity securities

Gain on disposal of property and equipment

17 unchanged sentences

Proceeds from sale of marketable securities

Payment of acquisition obligations

Net cash used in investing activities

4 unchanged sentences

Repayments of debt - term debt

Borrowings under margin account

Repayments under margin account

Dividends paid

Capitalized financing costs

Purchases of treasury stock

14 unchanged sentences

Balances – December 31, 2020

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Comprehensive income

Dividends paid ($ 0.105 per share)

Stock based compensation

Purchases of treasury stock

Balances – April 3, 2021

Comprehensive income (loss)

Purchases of treasury stock

Balances - July 4, 2020

Comprehensive income (loss)

Balances – October 3, 2020

Balances – December 31, 2021

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Comprehensive (loss)

Dividends paid ($ 0.105 per share)

Purchases of treasury stock

Stock based compensation

Balances – April 2, 2022

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Balances - July 3, 2021

Comprehensive income (loss)

Dividends ($ 0.105 per share)

Balances –October 2, 2021

See accompanying notes to consolidated financial statements.

3 unchanged sentences

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

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

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.

29 unchanged sentences

Revenue Recognition

The Company broadly groups its services into the following categories:

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

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

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

33 unchanged sentences

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

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).

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

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

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, and unrealized gains (losses) on equity securities (in thousands):

Unrealized gain (loss)

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

Unrealized gain

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

1 unchanged sentence

Gross unrealized losses

Net unrealized gains (losses)

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

Net unrealized gains

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

Thirteen weeks ended

Thirty-nine weeks ended

Realized gain:

3 unchanged sentences

Realized gain, net of taxes

During the thirteen-week and thirty-nine week periods ended October 2, 2021, our marketable equity securities portfolio experienced a net unrealized pre-tax (loss) gain in market value of approximately $( 110,000 ) and $ 1,249,000 , respectively, which was reported in other non-operating income (expense) for the period.

During the thirteen-week and thirty-nine week periods ended October 3, 2020, our marketable equity securities portfolio experienced a net unrealized pre-tax (loss) in market value of approximately $( 497,000 ) and $( 3,031,000 ), respectively, which was reported in other non-operating income (expense) for the period.

The Company did no t sell marketable equity securities during the thirteen-week period April 2, 2022.

During the thirteen-week periods ended April 2, 2022 and April 3, 2021, our marketable equity securities portfolio experienced a net unrealized pre-tax gain in market value of approximately $ 949,000 and $ 974,000 , respectively, which was reported in other non-operating income for the period.

UNIVERSAL LOGISTICS HOLDINGS, INC.

6 unchanged sentences

Legal settlements and claims

Commissions, taxes and other

Commissions, other taxes and other

Debt is comprised of the following (in thousands):

Interest Rates

at October 2, 2021

at April 2, 2022

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 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 on 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 October 2, 2021, we were in compliance with all covenants under the facility, and $ 27.8 million was available for borrowing on the revolver .

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Debt – continued

At April 2, 2022, we were in compliance with all covenants under the facility, and $ 51.0 million was available for borrowing on the revolver .

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

At April 2, 2022, we were in compliance with all covenants.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Debt – continued

(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 October 2, 2021, the maximum available borrowings under the line of credit were $ 4.2 million.

At April 2, 2022, the maximum available borrowings under the line of credit were $ 4.4 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 $ 11.4 million at October 2, 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 $ 10.2 million at April 2, 2022.

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 $ 0.2 million) and expires in May 2022 .

At October 2, 2021, the fair value of the swap agreements was a liability of $ 0.4 million.

At April 2, 2022, the fair value of the swap agreements was an asset of $ 0.1 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

Fair Value Measurement

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Fair Value Measurements and Disclosures – continued

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 October 2, 2021 is summarized as follows:

The carrying value and estimated fair value of these promissory notes at April 2, 2022 is summarized as follows:

Carrying Value

4 unchanged sentences

Notes to Unaudited Consolidated Financial Statements - Continued

On January 1, 2019, we adopted ASU 2016-02, Leases, which required us to recognize a right-of-use asset and a corresponding lease liability on our balance sheet for most leases classified as operating leases under previous guidance.

ASU 2016-02, Leases, requires us to recognize a right-of-use asset and a corresponding lease liability on our balance sheet for most leases classified as operating leases under previous guidance.

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.

As of October 2, 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 April 2, 2022, 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 October 2, 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 April 2, 2022, 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 weeks and thirty-nine weeks ended October 2, 2021 and October 3, 2020 (in thousands):

Thirteen weeks ended October 2, 2021

With Affiliates

With Third Parties

The following table summarizes our lease costs for the thirteen week periods ended April 2, 2022 and April 3, 2021 (in thousands):

April 2, 2022

Operating lease cost

3 unchanged sentences

Total lease cost

Thirteen weeks ended October 3, 2020

With Affiliates

With Third Parties

April 3, 2021

Operating lease cost

6 unchanged sentences

Leases – continued

Thirty-nine weeks ended October 2, 2021

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

Thirty-nine weeks ended October 3, 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 thirty-nine week periods ended October 2, 2021 and October 3, 2020 (in thousands):

October 2, 2021

The following table summarizes other lease related information as of and for the thirteen week periods ended April 2, 2022 and April 3, 2021 (in thousands):

April 2, 2022

Other information

Cash paid for amounts included in the measurement of operating leases

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 asset change due to lease termination

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

Weighted-average remaining lease term (in years)

Weighted-average discount rate

October 3, 2020

April 3, 2021

Other information

Cash paid for amounts included in the measurement of operating leases

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

Right-of-use asset change due to lease termination

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

Weighted-average remaining lease term (in years)

Weighted-average discount rate

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Leases – continued

Future minimum lease payments under these operating leases as of October 2, 2021, are as follows (in thousands):

Future minimum lease payments under operating leases as of April 2, 2022, are as follows (in thousands):

With Affiliates

With Third Parties

2022 (remaining)

2 unchanged sentences

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 shareholder, provides administrative support services to Universal in the ordinary course of business, including legal, human resources, IT infrastructure and other requested services.

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

Moroun, provide certain supplementary administrative support services to Universal, including legal, human resources, tax, 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 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 thirty-nine weeks ended October 2, 2021 and October 3, 2020, respectively (in thousands):

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

Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks ended April 2, 2022 and April 3, 2021 (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

Administrative support services

Truck fuel, tolls and maintenance

Real estate rent and related costs

Insurance and employee benefit plans

Purchased transportation and equipment rent

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.

Administrative support services

Truck fuel, maintenance and other operating costs

Contracted transportation services

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

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

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.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Transactions with Affiliates - continued

We also lease 28 facilities from related parties.

We lease 33 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 owned by our controlling shareholder.

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

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 April 2, 2022 and December 31, 2021, there were $ 21.4 million and $ 20.4 million, respectively, included in each of these accounts for insured claims.

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

At October 2, 2021 and December 31, 2020, amounts due to affiliates were $ 15.0 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 October 2, 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 contracted with an affiliate to provide real property improvements during the thirty-nine weeks ended October 2, 2021 totaling $ 956,000 .

During the thirty-nine weeks ended October 3, 2020, we purchased wheels and tires from an affiliate totaling $ 618,000 .

At April 2, 2022 and December 31, 2021, amounts due to affiliates were $ 16.1 million and $ 17.8 million, respectively.

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 and thirty-nine weeks ended October 2, 2021 and October 3, 2020 (in thousands):

We periodically assist our affiliates by providing selected transportation and logistics support 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 2, 2022 and April 3, 2021 (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

Purchased transportation and equipment rent

At October 2, 2021 and December 31, 2020, amounts due from affiliates were $ 1.0 million and $ 1.2 million, respectively.

Contracted transportation services

Facilities and related support

At April 2, 2022 and December 31, 2021, amounts due from affiliates were $ 1.6 million and $ 0.8 million, respectively.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Stock Based Compensation

13 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 vest in four equal increments on each February 20 in 2020, 2021, 2022 and 2023.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Stock Based Compensation - continued

The vesting of restricted stock awards to a grantee 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 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 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, 2022

Balance at October 2, 2021

In each of the thirty-nine week periods ended October 2, 2021 and October 3, 2020, the total grant date fair value of vested shares recognized as compensation costs was $ 0.2 million.

As of October 2, 2021, there was approximately $ 1.6 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

Balance at April 2, 2022

In each of the thirteen-week periods ended April 2, 2022 and April 3, 2021, the total grant date fair value of vested shares recognized as compensation costs was $ 0.2 million.

As of April 2, 2022, there was approximately $ 1.4 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

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

As a result, the Company expects to recognize stock-based compensation expense of $ 0.2 million in each year of 2022 and 2023, $ 0.4 million in 2024, $ 0.1 million in 2025, $ 0.3 million in 2026, and $ 0.2 million in each 2027 and 2028.

As a result, the Company expects to recognize stock-based compensation expense of $ 0.2 million in 2023, $ 0.4 million in each 2024 and 2026, and $ 0.2 million in each 2027 and 2028.

Earnings Per Share

1 unchanged sentence

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

For the thirteen weeks and thirty-nine weeks ended October 2, 2021, there were 8,604 and 13,433 weighted average non-vested shares of restricted stock, respectively, included in the denominator for the calculation of diluted earnings per share.

For the thirteen weeks and thirty-nine weeks ended October 3, 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 thirty-nine weeks ended October 2, 2021, we excluded 13,750 shares of non-vested restricted stock from the calculation of diluted earnings per share because such shares were anti-dilutive.

In each of the thirteen weeks and thirty-nine weeks ended October 3, 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.

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

For the thirteen weeks ended April 2, 2022 and April 3, 2021, we included 629 and 14,613 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 2, 2022 and April 3, 2021, we excluded 9,230 and 0 shares of non-vested restricted stock, respectively, from the calculation of diluted earnings per share because such shares were anti-dilutive.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

On February 10, 2022 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on April 4, 2022 to shareholders of record at the close of business on March 7, 2022 .

Segment Reporting

In December 2020, we changed the way we aggregate our business units and adopted a new segment reporting structure.

As part of the new structure, we separated our previous transportation segment into three reportable segments:

trucking, intermodal, and company-managed brokerage.

In addition, we changed the name of our previous logistics segment to contract logistics.

As a result, we now report our financial results in four distinct reportable segments:

We report our financial results in four distinct reportable segments:

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

2 unchanged sentences

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 by our agents and company-managed terminals using a mix of owner-operators, company equipment and broker carriers.

Operations aggregated in our trucking segment are associated with individual freight shipments coordinated by primarily by our agents and company-managed terminals using a mix of owner-operators, company equipment and broker carriers.

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

1 unchanged sentence

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 October 2, 2021 and October 3, 2020 (in thousands):

The following tables summarize information about our reportable segments for the thirteen week period ended April 2, 2022 and April 3, 2021 (in thousands):

Operating Revenues

Thirteen weeks ended

Thirty-nine weeks ended

Contract logistics

3 unchanged sentences

Thirteen weeks ended

Thirty-nine weeks ended

Contract logistics

Company-managed brokerage

Total operating revenues

Total eliminated inter-segment revenues

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Segment Reporting - continued

Income from Operations

Thirteen weeks ended

Thirty-nine weeks ended

Contract logistics

Company-managed brokerage

Total operating revenues

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Total income from operations

Commitments and Contingencies

4 unchanged sentences

In October 2021, the Company received an adverse ruling requiring the Company to, among other things, reinstate the terminated drivers and compensate them for back pay.

The Company intends to appeal the decision.

The Company is appealing the decision.

The calculation of the amount owed to the drivers will take into consideration any offsetting earnings made by terminated individuals since their separation from the Company.

2 unchanged sentences

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.

The Company received the first two $ 2.0 million payments of each on June 9, 2021 and September 30, 2021.

On January 28, 2022, the Company was served with charges from the NLRB based on allegations of the International Brotherhood of Teamsters against the Company and four of its subsidiaries.

The charges allege, among other things, that certain of the Company’s independent contractors in California should be classified as employees, rather than independent contractors.

The Company has denied all charges and plans to defend the use of independent contractors in conducting its business.

A hearing on the matter is schedule for June 2022.

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 October 2, 2021, approximately 38 % 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, none of which are subject to contracts that expire in 2021.

At April 2, 2022, approximately 34 % of our employees in the United States, Canada and Colombia, and approximately 80 % 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 2022.

Subsequent Events

On October 28, 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 December 6, 2021 and is expected to be paid on January 4, 2022 .

On May 5, 2022 , 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 6, 2022 and is expected to be paid on July 5, 2022 .

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Subsequent Events - continued

On April 29, 2022, the Company executed a credit agreement and related security and mortgage agreement with a syndicate of lenders, and Fifth Third Bank, N.A., as administrative agent.

The credit agreement provided for a $ 165.4 million term loan facility, the full amount of which was advanced on April 29, 2022.

The facility matures on April 29, 2032 .

Under the terms of the credit agreement, the Company used the facility’s proceeds (a) to repay approximately $ 116.4 million of aggregate principal amount outstanding under the credit and security agreement among Universal’s applicable borrowing subsidiaries and KeyBank, N.A., including accrued and unpaid interest and related fees, (b) to repay in full approximately $ 39.5 million of aggregate principal amount outstanding under Universal’s term loan and security agreement with Flagstar Bank, FSB, including accrued and unpaid interest and related fees, and (c) to pay transaction-related fees and expenses.

The 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 is payable on the facility on a monthly basis, based on an annual amortization of 10 %.

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

On April 29, 2022, the Company also entered into an interest rate swap with Fifth Third Bank, N.A.

to fix a portion of the variable rate debt with an amortizing notional amount of $ 100 million.

Under the swap agreement, the Company receives interest at Term SOFR and pays a fixed rate of 2.88 %.

The swap has an effective date of April 29, 2022 and a maturity date of April 30, 2027 .

On May 4, 2022, the Company’s shareholders approved an amendment to the 2014 Amended and Restated Stock Incentive Plan.

Under the amendment, the number of shares of the Company’s common stock authorized for issuance under the Plan increased to 700,000 shares.

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