What happened
Universal Logistics Holdings (ULH 39.37%) reported record fourth-quarter and full-year financial results, but warned that it will be difficult to sustain that success in the year to come. Investors were focused on the tepid outlook, sending shares down about 12% on Friday.
So what
Universal Logistics provides a range of transportation services to corporate customers, with operations throughout North America and in Colombia. The company earned $1.27 per share in the fourth quarter on revenue of $458.7 million. The earnings figure easily topped the $0.60-per-share estimate, but revenue was down 1.9% year over year and came in about $9 million short of expectations.
For the full year, Universal more than doubled net income and reported revenues in excess of $2 billion.
Contract logistics, Universal's largest segment, led the way, with revenue up 27.9% in the quarter and posting a 14.7% operating margin. The trucking, intermodal, and company-managed brokerage segments all saw revenue and margins decline.
Now what
Universal has been an overachiever during the "great reopening" as companies have scrambled to get their supply chains back on track following the pandemic. The stock is up more than 100% over the past 12 months, even with Friday's declines.
But as demand normalizes and customers look at an increasingly uncertain macroeconomic environment, growth from here will be harder to come by.
CEO Tim Phillips said, "We are navigating a much different transportation environment" in 2023 weighed down by issues including "excess retail inventories, a slowdown in industrial production, and loosening capacity."
Universal is a solid business, but with the stock up big over the past year and in the face of headwinds that management can do little to offset, investors appear to be headed for the off-ramp after the earnings release.
