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Date
Friday, July 25, 2025 at 2:00 p.m. ET
Call participants
Chief Executive Officer — Tim Phillips
Chief Financial Officer — Jude Beres
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Risks
Operating income, net income, and margins declined significantly year over year. Net income (GAAP) dropped from $30.7 million in fiscal Q2 2024 to $8.3 million. Operating margin fell from 10.2% in fiscal Q2 2024 to 5.1%.
The intermodal segment posted a $5.7 million operating loss, despite improvements from both the previous quarter and the prior year, signaling continued financial pressure in that division.
Trucking revenues declined nearly 30% year over year, driven by a 22.6% fall in load volumes and an 8.9% decrease in revenue per load, excluding fuel surcharges.
Takeaways
Net income-- $8.3 million, or 32¢ per diluted share, sharply down from $30.7 million, or $1.17 per share, in fiscal Q2 2024.
Operating income-- $19.9 million, down from $47.1 million in fiscal Q2 2024, reflecting a 5.1% operating margin versus 10.2% in fiscal Q2 2024.
EBITDA-- $56.2 million, down $28.6 million from $84.8 million in fiscal Q2 2024; EBITDA margin declined to 14.3% from 18.4% in fiscal Q2 2024.
Contract logistics segment-- Revenue was $260.6 million with $21.8 million in operating income (8.4% margin), compared to prior-year revenue of $263.6 million and $52.9 million operating income (20.1% margin) for fiscal Q2 2024. Parsec contributed $55 million in revenue.
Trucking segment-- Revenues declined to $64.1 million from $91.4 million in fiscal Q2 2024 due to 22.6% lower load volumes and an 8.9% drop in revenue per load (excluding fuel), while operating margin improved to 5.2% from 4.8% in fiscal Q2 2024.
Intermodal segment-- Revenues fell to $68.9 million from $79.7 million in fiscal Q2 2024; load volumes declined nearly 13% year over year but the segment narrowed its operating loss to $5.7 million with an improved operating ratio of 108.2 from 110.8 in fiscal Q2 2024.
Sales initiatives-- The company expanded its sales organization with new senior sales directors and began deploying a new customer relationship management platform to unify sales activities and enhance visibility into a $1 billion sales pipeline.
Guidance-- Management guided for Q3 2025 revenues of $390 million to $410 million, operating margins of 5%-7%, and EBITDA margins of 14%-16%. Full-year expectations align with Q3 2025 operating and EBITDA margin guidance.
Capital expenditures-- Guidance for full-year 2025 equipment capex of $100 million to $125 million, and real estate capex of $50 million to $65 million.
Dividend-- The board declared a regular quarterly dividend of 10.5¢ per share, payable October 1, 2025, to shareholders of record as of September 1, 2025.
Debt and leverage-- Interest-bearing debt (net of issuance costs) totaled $795.5 million at the end of fiscal Q2 2025. Net interest-bearing debt/EBITDA ratio was 3.13 times (excluding ASC 842 lease liabilities) as of fiscal Q2 2025. Interest expense is expected to be $48 million to $51 million for the full year 2025.
Summary
Universal Logistics Holdings(ULH 2.16%) reported a quarter marked by revenue contraction and margin pressures across all major segments, with the intermodal business continuing to face operating losses. Management stated that cost discipline and operational streamlining remain key priorities as the company executes an expanded enterprise-wide sales transformation to restore top-line momentum. Results were influenced by weaker freight volumes in trucking, slower automotive production, and tariff-driven headwinds, particularly in the intermodal division.
CEO Phillips said, "the tariffs did have an impact on our intermodal division and imports coming into the country. The way I saw it is we saw a general falloff in some of our normal volumes somewhere in May and that lasted generally through the month of June."
Management attributed the year-over-year decline in contract logistics operating margin to the absence of Stanton project revenue and higher Parsec integration-related depreciation and amortization.
The intermodal segment showed sequential improvement, narrowing its operating loss from $10.7 million in the previous quarter. Management is targeting a return to profitability as early as Q3 or Q4 2025, contingent on sales execution and cost rationalization.
In trucking, management identified intensified weakness in legacy agent-based and industrial freight, but emphasized a positive medium-term outlook for specialized freight including wind energy, supported by new federal incentives.
The company expects a cyclical uplift in intermodal volume in Q3 2025, with potential pent-up ordering by discount retailers; however, management notes that visibility beyond this period remains limited.
Industry glossary
Operating ratio: A measurement of operating expenses as a percentage of revenue, used to assess efficiency in transportation businesses.
Parsec: Recently acquired logistics provider integrated into Universal’s contract logistics segment, contributing segment revenue.
SAAR (Seasonally Adjusted Annual Rate): An industry measure of expected annual vehicle sales, adjusted for seasonal patterns.
Stanton project: A specialty development program in Tennessee completed in 2024, which previously contributed substantial revenue to contract logistics.
Full Conference Call Transcript
Tim Phillips: Good morning, and thank you for joining Universal Logistics Holdings, Inc.'s second quarter 2025 earnings call. The 2025 remained a challenging environment across the transportation and logistics industry. We saw freight market slightly lower automotive production, and tough comps from a prior year all contributed to a muted but better overall results sequentially. However, our performance was broadly in line with our expectations. We continue to take the necessary steps to manage costs, enhance efficiencies, and position the business for long-term growth. Before diving into the numbers, I would like to recognize the efforts of our over 11,000 employees and contractors. Their continued dedication and effort have consistently provided our customers with a seamless, best-in-class service in a difficult environment.
Let's review the results for the quarter. Universal reported second quarter 2025 operating revenues of $393.8 million with net income of $8.3 million or 32¢ per diluted share. Operating income for the quarter was $19.9 million representing a 5.1% operating margin. EBITDA came in at $56.2 million or 14.3% of revenue. While down from the prior year, these results reflect our continued ability to generate solid cash flows and maintain profitability in a persistently soft freight market. Now let's look at performance by segment. Our contract logistics segment remains the cornerstone of our results. Revenues were $260.6 million, down slightly from Q2 of last year.
The integration of Parsec continues to progress smoothly and contributed $55 million in revenue during the quarter. As a reminder, the prior year included $44.6 million of revenue related to our now completed development project in Stanton, Tennessee. Contract Logistics operating income was $21.8 million with an 8.4% margin. While margins were lower year over year due to the absence of the special development project, and increased depreciation and amortization on our recent Parsec acquisition, the core business remains healthy. We continue to operate 87 value-added programs, including 20 rail terminals, up from 68 programs a year ago.
We are confident in the stability and long-term growth prospects of this segment, especially as we integrate our expanded footprint and pursue new contract opportunities. Turning to trucking. Revenues were $64.1 million, down nearly 30% year over year. This was primarily due to the 22.6% drop in load volumes and an 8.9% decrease in revenue per load, excluding fuel surcharges. That said, I'm encouraged by the 5.2% operating margin, up from 4.8% a year ago, and the $3.3 million in operating income. Our focus on specialized freight, including our wind energy business, continues to support more resilient margins even in the depressed market.
Sequential improvements from the first quarter signal we are on the right path and we expect improvement in the second half of the year. Our intermodal segment remains under pressure, but we are seeing signs of progress. Revenues were $68.9 million, down 13.5% year over year. Load volumes declined nearly 13% but pricing showed some stability, with a slight improvement in revenue per load excluding fuel. We narrowed our operating loss to $5.7 million from $10.7 million in the first quarter and sequentially improved our operating ratio to 108.2 from 115.1 in Q1. While we are not where we want to be, the quarter-over-quarter progress is encouraging.
Our focus remains on optimizing operations, exiting unprofitable business, rationalizing all costs, and positioning this segment to return to profitability. Across all segments, we remain focused on cost discipline, operational execution, and expanding our sales pipeline. Our diverse service portfolio continues to provide balance and stability as we manage through cyclical pressures. As we continue to navigate a softer freight market, we are doubling down on strategic initiatives to strengthen our sales engine and drive long-term profitable growth. We have a new executive leadership shaping our enterprise-wide sales and business development initiatives. This role reflects our commitment to building a more integrated and customer-driven sales organization that aligns with Universal's long-term strategic objectives.
In addition, we've expanded our sales organization with the hiring of several senior sales directors across key regions and service lines. These hires bring deep experience and strong customer relationships in core industries including automotive, industrial, and retail. We also began rolling out a new customer relationship management solution to unify sales activity across the company and provide better visibility into our growing $1 billion sales pipeline. These enhancements are already yielding improved coordination and accelerating the pace at which we are able to identify and present customer-centric solutions. We expect our enhanced commercial capabilities to play a critical role in achieving our margin growth targets over the coming quarters.
To close, while the macro environment remains challenging, I am confident in our team, our strategy, and our ability to adapt and execute. We are taking the right steps to weather the near-term storm while positioning Universal for sustained, profitable growth over the long term. Thank you again to all our team members for your continued dedication and to our customers and shareholders for your ongoing trust and support. I will now turn the call over to Jude to provide additional details on the financials and our outlook going forward.
Jude Beres: Thanks, Tim. Good morning, everyone. Yes, Universal Logistics Holdings, Inc. reported consolidated net income of $8.3 million or 32¢ per share on total operating revenues of $393.8 million in the second quarter of 2025. This compares to net income of $30.7 million or $1.17 per share on total operating revenues of $462.2 million during the same period last year. Consolidated income from operations was $19.9 million for the quarter, compared to $47.1 million one year earlier. EBITDA decreased $28.6 million to $56.2 million, which compares to $84.8 million during the same period last year. Our operating margin and EBITDA margin for 2025 are 5.1% and 14.3% of total operating revenues.
These metrics compared to 10.2% and 18.4% respectively in the second quarter of 2024. Looking at our segment performance for the second quarter of 2025, in our contract logistics segment, which includes our value-add and dedicated transportation businesses, income from operations decreased $31.1 million to $21.8 million on $260.6 million of total operating revenues. This compares to operating income of $52.9 million on $263.6 million of total operating revenue in the second quarter of 2024. For comparison purposes, in 2025 included $55 million of revenue attributable to our recent acquisition of Parsec, while 2024 included $44.6 million of revenue attributable to our specialty development program, which was completed in late 2024.
Operating margins for the quarter were 8.4% of total operating revenues, compared to 20.1% one year earlier. Onto our intermodal segment. Operating revenues decreased $10.7 million to $68.9 million compared to $79.7 million in the same period last year. And operating results improved $3 million to an operating loss of $5.7 million. This compares to an operating loss of $8.6 million in the second quarter of 2024. Operating ratios for the quarter were 108.2 versus 110.8 last year. In our trucking segment, operating revenues for the quarter decreased $27.4 million to $64.1 million compared to $91.4 million in the same quarter last year. And income from operations increased $1 million to $3.3 million.
This compares to $4.4 million in the second quarter of 2024. Operating margins for the quarter were 5.2% versus 4.8% last year. For comparison purposes, one additional item of note. $26.7 million of brokerage revenues are included in the second quarter last year from our now closed company-managed brokerage operation in Nashville. On our balance sheet, we held cash and cash equivalents totaling $24.3 million and $9.9 million of marketable securities. Outstanding interest-bearing debt net of $3.1 million debt issuance cost totaled $795.5 million at the end of the period. Excluding lease liabilities related to ASC 842, our net interest-bearing debt to reported trailing twelve-month EBITDA was 3.13 times. Capital expenditures for the quarter were $84.3 million.
For the third quarter of 2025, we are expecting top-line revenues between $390 million and $410 million, operating margins in the 5 to 7% range, and EBITDA margins between 14 to 16%. For the full year, we are expecting top-line revenues between $1.2 billion and $1.7 billion, with operating and EBITDA margins similar to our range in our Q3 guidance. For the full year, we are expecting capital expenditures for equipment to be in the $100 to $125 million range, and real estate between $50 and $65 million. Interest expense is expected to come in between $48 and $51 million as well. Finally, Wednesday, our board of directors declared Universal's 10.5¢ per share regular quarterly dividend.
This quarter's dividend is payable to shareholders of record at the close of business on 09/01/2025 and is expected to be paid on 10/01/2025. With that, Chloe, we are ready to take some questions.
Operator: Thank you. Ladies and gentlemen, we will now conduct a question and answer session. If you would like to ask a question, please press star and the number one on your telephone keypad. If you would like to withdraw your question, please press star 2. If you are using a speakerphone, please lift the handset before pressing any keys. We will pause for just a moment to compile the Q&A roster.
Tim Phillips: Our first question comes from the line of Bruce Chan from Stifel. Your line is open.
Andrew Cox: Hey. Good morning, gentlemen. This is Andrew Cox on for Bruce.
Jude Beres: Hey, Andrew.
Andrew Cox: Hey, guys. Just wanted to, I guess, start off here with a bit of the tariff headwind and just discuss how impactful you guys thought it was to Q2 across the business. And, you know, what are the kind of conversations you are having with customers about potential restocking into Q3 and through year-end? And I guess, you know, on that note, talk a little bit about what normal seasonality would look like in the business and how you are expecting it to trend relative to that? Thank you.
Tim Phillips: Yeah. I'll start. This is Tim. I think the tariffs did have an impact on our intermodal division and imports coming into the country. The way I saw it is we saw a general falloff in some of our normal volumes somewhere in May and that lasted generally through the month of June. And it appears that falloff was specifically highlighted from discount retailers that had a large presence of Chinese sourcing. While on other customer fronts, there was some flexibility on sourcing from overseas. So we saw some of those types of customers audible and volumes remained somewhat consistent. But overall, it was an effect on the intermodal division.
The other divisions saw a lesser impact as it was related to tariffs. Although in the prepared remarks, as I mentioned, we saw a little bit of a falloff on automotive production. It was minimal on a year-over-year basis. So I did not see any serious challenge. The way I read the output from the autos is that they did a good job trying to source where they had to source from and making those key strategic war room decisions. Now as we level set, I do not know if there is really any clear firm direction that we are getting on where we are going to go from a tariff basis.
You know what you read as I do in the news. We do believe we will see some normal cyclical uplift as we normally would in the third quarter. We believe that some of the intermodal volumes will be more cyclical in nature. But there is definitely a pause in how much lift that will be. I think that we will see some pent-up ordering that was not done in the second quarter, especially when it comes to discount retailers, will probably hit shores this quarter. So we expect that to help our numbers. Beyond that, I really could not give you good guidance on what it looks like exiting the year from an import standpoint.
Jude Beres: Just one more comment. This is Jude. I think, also, when you look at the ISRs across retail, wholesale, and manufacturing, they are all kind of flattish to down a little bit year over year. So, you know, although there has been a lot of the choppiness in the first half of the year due to tariffs, you would think that because of how those inventory to sales ratios are shaking out, that would be a catalyst for a back half. But I think as Tim alluded to, it is kind of wait and see at this moment.
Andrew Cox: Yeah. Certainly. So just seeing the retailers in particular are a bit lean right now. You know, sticking with that intermodal part of the business, you know, discussing some of the profitability initiatives you guys have ongoing, can you refresh us here and walk us through the progress and timeline here thus far? I mean, the loss has narrowed this quarter, but, you know, is it realistic to expect this business to reach a turning point by the end of the year and particularly, I mean, possibly get back into the black based on the current business trends, or is this looking towards a 2026 event?
Tim Phillips: Yes. I mean, to start with the last part of your question, our goal is to return to profitability in the third or fourth quarter. A good percentage of what we need to do is on the top end of the funnel. It does depend on the sales activity. It does depend on our pricing profile as we navigate any additional bids as well as going back to customers on bids that have already closed to see if there is room for growth. We think we are well-positioned from an asset standpoint in the markets where we need to grow.
We think we are very well-positioned and made the commitment and investments from a location standpoint on our properties as they serve the ports and rails around the United States. So I think we are well set on that. As I have mentioned in my prepared remarks, we have had a real strong focus on the sales objectives. We have new sales leadership. And we are heavily involved in cross-selling the different customers between divisions, specifically as you mentioned on the intermodal side, we believe this will bring about new customer opportunities.
In conjunction with that, on the other side of the map, the efficiencies and how we support that growth and where we look for that cost rationalization, we are middle of the road halfway through our centralization process of customer service and our operations. As we do that, we are rationalizing headcount and also making sure as we do that, the focus is on the tail end, making sure that we are giving the customer the service they expect and deserve.
And from a back-office standpoint, we are taking a real sharp pencil and looking at what we have been awarded, making sure that there is revenue realization from the awards that we have been promised, looking at any potential decliner customers and trying to work with them to figure out what we need to do to garner more of their freight. And then I think we are taking a very specific approach besides the bigger customers. We are also looking into the spot market and making sure that we are effective in capturing all the opportunities to fill in the cracks that we have with our bigger customers.
So it is a full-court press on the sales side as well as continuing in a parallel path to streamline making sure their operation is as efficient and optimized as possible.
Andrew Cox: Yeah. That is helpful. Thank you. Moving on to I guess we could touch on you touched on it briefly in the opening response, but just kind of on the auto OEM and Class A backdrop. You know, it does seem like the visibility here gets worse every time that we discuss future quarters. I guess, you know, to us, it does seem like the OEM and Class A is uncertain and maybe declining, respectively. I just wanted to get your thoughts on that. And then, you know, next is what levers do you guys have potentially to drive improvements in the business if the top line kind of remains a challenge for you guys?
Jude Beres: Yes. This is Jude. I'll start. So yes, I mean, you look at the year-over-year numbers for two of our customers within that space, I mean, one of them was down 30% year over year, the other was down 70% year over year on volume. So, yeah, there is not a lot of positive outlook for that space. I mean, the new orders in '25 were less than Q2 of 2020, which is the COVID period. Right? So you know, you kind of look out in that space, and you say, well, what is going on there? Well, there are import tariffs on steel and aluminum.
You still have a really soft trucking backdrop, which is really a dip in for trucking companies to make the investments. Now maybe the new tax legislation and the one big beautiful bill will help spurn some of that economic activity within Class A, but I think that will kind of shake out over the next couple of quarters.
Then I think finally, I mean, just from the global side is that, you know, the administration rolling back those NOC standards on that 2027 engine and those California emissions regulations, I think the industry overall prior to that executive order, were really expecting, you know, a really solid pull forward ahead prior to 2027, but, you know, it is all going to be muted and kind of once again and wait and see mode as we go forward. So I think the tariffs obviously impacting that business, soft trucking environment impacting that business, and then, of course, the NOC standards for 2027 engines impacting the pull forward.
Tim Phillips: Yeah. And to add to the Class A move beyond into the autos, as we had mentioned in the prepared remarks, it is still fairly consistent. Although the SAAR has dropped recently, the customers that we deal with and the locations that production is happening at, we still have a pretty decent look at the second half of the year. And I do not see any drastic drop at this particular time. It has not hurt us because of where we operate in supply and part of the supply chain. There is some increased production in the United States. As some of these adjustments to tariffs have happened.
And I think those adjustments to the United States have helped us in certain locations with steady or increased production. So I still have an optimistic outlook for the second half of the year.
Andrew Cox: Okay. The moving parts there. Moving on to the trucking just for a moment here. I mean, it does seem like a pretty good result for trucking, but the business, you know, continues to shrink here. What needs to happen for this business to start growing again? You know? And if the cycle turns, is there negative leverage in this business now? Do you guys feel that you will need to add resources here to meet demand? I know that you guys felt you felt pretty good about the asset front in intermodal, but kind of wanted to ask about trucking.
Jude Beres: Yeah. I'll kick this one off. So, yeah, I think there is a couple of phenomena. So we have kind of two aspects to that business. We have the legacy agent-based business on one side, which has really been the one that has been shrinking over the past couple of years. You know, related to some initiatives that we have both done internally as well as the overall macro environment, which has really not been indicative to trucking, particularly in the van front. If you remember, that business is about 70% flatbed. And then 50% of that volume is also specifically related to metals and steel. So very heavily industrial-focused on the legacy side of the business.
And, you know, kind of being in that industrial recession that we have been in over the past few years has really been a major macro headwind in that space. Now on the other side of that of our trucking business, we have the wind franchise. Where we have been investing heavily. So we haul blades. We haul towers, and we haul components. That business was impacted negatively in the first half of the year. Primarily because of tariffs. A lot of those components are imported. But I think the cadence that we are seeing in the back half of the year should make up for the shortfall in that business that we experienced in the first half.
And then, of course, we have a pretty clear runway now with the one big beautiful bill on, you know, what is going to happen for the next five years through 2030. So I think most of the headwinds in the wind side of the business are going to be manageable and start to improve in the coming quarters. I think on the other side of the business, on the legacy side, we really need some kind of catalyst in the general freight market to really turn that business to growing again.
Tim Phillips: Yeah. And I would agree with that on the agent side. We really rationalized the group of agents we had and how we wanted to push forward as an organization. So we think we have a level footing on the makeup of the agent. We are actively recruiting new agents as you would imagine, and we put some additional sales power and oversight on that side of the business. As Jude had mentioned on the specialized side, there is an extreme focus not only on the wind product, which we are really bullish on, we are also going to branch out into other heavier haul type opportunities that might support various industries.
So we are pretty bullish on the specialized and will continue to focus on building that product out.
Andrew Cox: And as a follow-up, on the changes to the incentive structure and whatnot with the big beautiful bill. I mean, should we expect this to be, you know, kind of a short-term or at least a, you know, over the next few years be a short-term tailwind and then potentially something that hurts long-term, you know, after the five-year period? I mean, should we expect to see some increased demand for the product? Given the incentives are rolling out.
Tim Phillips: No. I think the way that we should imagine this is that as we decipher the bill, there is a period of time that those projects would need to get started. Right? So I think it is roughly a one-year period of time that they have to have the shape. The project will need to be started. They will need to have some start procurement of the equipment that is going to be used on the project. But then they are going to have another four years to complete that project. And it is a minimal commitment in the first year of what they have to purchase. I guess they have to show a good course of moving forward.
And then we believe that we will have a steady feed now and that should pick up towards the middle to end of that, let's call it, five-year period. So we expect, you know, '27, '28, '29 to be pretty fruitful years based on the fact that those projects will be in full swing and we will be there to serve and deliver.
Andrew Cox: Okay. That makes a lot of sense. Thank you guys so much for the time.
Operator: Again, if you would like to ask a question, there are no further questions at this time, Mr. Phillips. You please continue.
Tim Phillips: Thank you, Chloe. And thank you for joining Universal Logistics Holdings, Inc.'s second quarter earnings call. We remain committed to navigating the current economic environment and providing our customers with best-in-class service while creating additional shareholder value. I'm convinced the actions we have taken over the last couple of quarters have positioned us very well for future growth. I appreciate you dialing in. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.