Universal Truckload Services, Inc. — Q1 2012 Form 10-Q
Reporting period: Thirteen weeks ended March 31, 2012, compared with thirteen weeks ended April 2, 2011. The filing identifies the registrant as Universal Truckload Services, Inc.; this differs from the company name in the request metadata.
Business context and financial performance
The company describes itself as a primarily asset-light transportation provider, with truckload, brokerage and intermodal services. It relies substantially on owner-operators and third-party capacity. Amounts below are in U.S. dollars; financial statement amounts are in millions unless otherwise noted.
| Metric | Q1 2012 | Prior period | Change / context |
|---|---|---|---|
| Operating revenue | $175.8 | $157.6 | Up 11.6% |
| Operating income | $5.4 | $3.8 | Operating margin 3.1%, versus 2.4% |
| Net income | $3.6 | $2.9 | Net margin 2.0%, versus 1.8% |
| Diluted EPS | $0.23 | $0.19 | Basic EPS was also $0.23 and $0.19 |
| Cash from operations | $1.4 | $(1.4) | Improved year over year |
| Capital expenditures | $1.2 | $3.3 | Cash flow statement amounts |
Revenue, margins and material changes
- Revenue increased across all reported service lines: truckload to $104.1 million from $97.3 million; brokerage to $46.4 million from $36.8 million; and intermodal to $25.3 million from $23.5 million.
- Management attributed growth primarily to more loads, higher fuel surcharges and higher revenue per loaded mile. Combined loads rose to 199,000 from 188,000; fuel surcharges were $22.1 million versus $17.9 million. Truckload and brokerage revenue per loaded mile, excluding fuel surcharges, increased to $2.55 from $2.29.
- Operating expenses were 96.9% of revenue versus 97.6%. Purchased transportation rose to 76.8% of revenue from 76.4%, partly because fuel surcharges passed through to owner-operators. Commissions fell to 5.7% of revenue from 6.3%. SG&A remained 8.1% of revenue.
- Other non-operating income declined to $0.5 million from $1.0 million, including lower pretax gains on marketable securities: $0.4 million versus $0.8 million. Effective tax rate was 39.0%, compared with 40.1%.
Cash, liquidity and debt
- At March 31, cash and cash equivalents were $1.8 million and marketable securities were $16.0 million. Current assets were $113.0 million against current liabilities of $68.5 million; working capital was approximately $44.5 million.
- Cash increased $0.9 million during the quarter. Operating cash flow was $1.4 million; investing activities provided $0.4 million, while financing activities used $0.9 million, primarily for treasury stock purchases.
- No borrowings were outstanding under either the unsecured KeyBank facility or the UBS securities-backed facility. KeyBank’s maximum borrowings and letters of credit totaled $20 million; $40,000 of letters of credit were outstanding. UBS availability was $7.8 million, secured by marketable securities and callable at any time.
- The KeyBank facility matured October 23, 2012. The company reported compliance with its financial covenants. It also reported no outstanding balance on the former County of Cuyahoga loan.
Outlook, risks and unusual items
- Management expected 2012 capital expenditures, excluding acquisitions, of $1.5–$2.1 million for facilities and $10.4–$11.3 million for equipment. It stated that working capital and available borrowing capacity should be sufficient for operating and capital needs for at least twelve months, assuming continued profitability.
- The board declared a special $1.00-per-share cash dividend, totaling approximately $15.5 million, payable April 5, 2012. It was accrued as a current liability at quarter-end. Management said it did not anticipate future cash dividends and intended to retain future earnings.
- Management noted that first-quarter results are typically lower than those in the second through fourth quarters. It provided no specific earnings or revenue guidance.
- Marketable securities were $16.0 million, consisting of publicly traded equity securities. Unrealized losses of $288,000 were considered temporary by management; further market declines could lead to impairment charges. The filing also notes ordinary-course injury and property-damage claims, which management believed were insured or provided for, while warning outcomes could affect results or cash flows.
- The filing reported no material changes to previously disclosed risk factors or market risk, no off-balance-sheet arrangements, and effective disclosure controls as of March 31, 2012.
Important facts for investors to verify
- Confirm the registrant identity: the supplied filing is for Universal Truckload Services, Inc., not Universal Logistics Holdings, Inc.
- Review the sustainability of revenue and margin growth, particularly the effects of fuel surcharges, purchased transportation costs, and higher load volumes.
- Assess the special dividend’s effect on liquidity and the company’s ability to meet planned capital spending and other needs.
- Check refinancing or renewal status of the KeyBank facility, whose stated maturity was October 23, 2012, and monitor covenant compliance.
- Track the value and impairment risk of the equity-securities portfolio and the ultimate cost of claims and litigation.