Universal Logistics Holdings (NASDAQ:ULH) offered a glimpse of how COVID-19 is playing out at the beginning of the second quarter – a 30% drop in revenue in April. The worst of it was due to shutdowns in auto and heavy truck plants, where dedicated freight volumes fell to zero.
“We had to make some difficult decisions,” CEO Tim Phillips told analysts on Friday, May 1, after the Michigan-based transportation and logistics firm reported first-quarter financial results.
Phillips said Universal furloughed 17% of its regular employees and 33% of administrative staff as part of efforts to cut costs, which also include the suspension of its quarterly dividend.
Phillips expressed cautious optimism that plant shutdowns will begin lifting in the coming weeks, helping set the stage for a recovery.
“We’re hopeful that we will see things start to pick back up in mid-to-late May,” he said. Universal has also managed to retain most of its employee drivers and owner-operators, which will allow Universal to quickly take advantage of an uptick of business, Phillips said.
COVID-19 weighed on Univeral’s first quarter. The company had a net income of $12.2 million, or $0.45 per share, on $382.2 million in revenues during the quarter. Net income came in 29.4% lower than a year earlier, while revenues increased by 1.2%.
A $3.4 million loss on marketable securities helped drive down profits. The company’s underlying businesses appear more resilient than the decline in net income would suggest.
Operating income from its transportation segment – largely truckload, intermodal and brokerage operations – fell by 3.3% during the quarter. Operating income in its logistics segment – its dedicated and value-added services – fell by 15.4%.
Looking beyond the COVID-19 pandemic, Phillips said the acquisition of Road Runner Intermodal Services will continue to pay off as Universal completes the process of integrating the firm.
Universal’s truckload and dedicated operations saw the worst of the coronavirus impacts as slowdowns in retail and manufacturing eclipsed higher demand in essential consumer goods. Truckload revenue dropped by 10% to $58.9 million, while dedicated revenue fell by 14.7% to $31.6 million.
Despite intermodal revenue jumping by 21% to $110.3 million, Universal noted that COVID-19 weighed on its Southern California operations. Southern California’s intermodal revenue fell by $8.2 million during the quarter as loads plunged by 40%.
Universal’s brokerage services remained flat during the quarter, accounting for $85.9 million in revenue. Value-added services revenue fell by 2% to $95.5 million.
Mike
Will the suppliers be there? Will they be able to open? And will Universal be able to bring these drivers back when they are making more on unemployment than what they normally pay? That entire company is pretty much shut down here in the Detroit area, as they had another round of layoffs on Friday, the day of this article, my friend was one of them.
MrBigR504
Wow Mike, sorry to hear about your friend and the hardships you guys are going through up there. Yeah your right its gonna be tough to get driver to come back to work when they’re making more drawing unemployment! Geesh thats crazy because i thought Universal was paying pretty good up there…wow! Not that misery loves company but I’m and owner operator with Universal Intermodal in Atlanta and we’ve been at 2 or 3 loads a week for a couple of months now. The agent dropped her rate on some stuff and that got some more freight to trickle in. She hired on too many trucks around Chinese New year while the tariffs were in play and that definitely didn’t help! And now this shutdown from the virus just added to the mess. But by the “Grace of God” we’re still hanging in there. We’ve lost a good dispatch (she didn’t die) to the virus and some drivers got sick but are on the mend thank God! So in the mist of the chaos, were still in the fight (Thank you Heavenly Father) and we are praying for y’all up in Michigan. Stay safe and keep the faith!!!
Mike
Not looking good up here, our governor Half-Whit keeps extending this lockdown, we were hit pretty Good Friday with more layoffs, and I would bet the bankruptcies fire up this coming week too. Most everyone I know in the industry is sitting at home waiting on a check if they can ever file or pulling reefers as company drivers. And that freight is looking pretty shaky as the rates continue to collapse. Me, I start a construction job tomorrow. Going to use the tractor as an RV up where the work is 100 miles North of here. Just took the pick up to the truck stop I will be residing at until I can make other arrangements. Gotta do what ya got do. 😉