Executive Summary

Q2 delivered solid results despite freight recession: revenue $462.2M (+12% YoY), EPS $1.17 (+30% YoY), operating margin 10.2%; EBITDA margin expanded to 18.4% as contract logistics offset intermodal/brokerage weakness .
Contract Logistics was the engine: revenue $263.6M (+26.2% YoY) and 20.1% operating margin, aided by $44.6M from the specialty development program; trucking benefited from specialized heavy-haul wind, lifting revenue per load 28.5% .
Intermodal underperformed: revenue down 14.8% YoY, operating loss widened to $(8.3)M as accessorials and fuel surcharges fell; management sees potential H2 tailwinds from tariff pull-forward and peak season rates .
Guidance: Q3 revenue $450–$475M and margins 9–11%; full-year 2024 capex $315–$330M and interest expense $30–$32M; specialty program now expected to add $40–$50M in both Q3 and Q4 (raised vs prior cadence) .
Key catalyst: durability of double-digit margins in Contract Logistics and an improving intermodal trajectory (June best month of year outside CA), plus raised specialty program cadence and ongoing discipline on costs .

What Went Well and What Went Wrong

What Went Well

Contract Logistics sustained double‑digit operating margins for the tenth consecutive quarter; Q2 OR below 80% per prepared remarks; revenue +26.2% YoY to $263.6M and operating income $52.9M (20.1% margin). “Diversity is our strength… Contract logistics led the way” — CEO Tim Phillips .
Specialty development program execution: $44.6M recognized in Q2; raised cadence to $40–$50M for Q3 and Q4; total 2024 expected ~$228M; costs housed in operating supplies & expense, lifting segment profitability .
Trucking mix shifted favorably: revenue +12.6% YoY to $91.4M; revenue per load ex‑fuel +28.5% on specialized heavy‑haul wind despite load count down 11.1%; pipeline full through year .

What Went Wrong

Intermodal weakness: revenue down 14.8% YoY to $78.1M; operating loss $(8.3)M (OR 110.6%); accessorial charges fell to $8.1M (vs $13.4M) and fuel surcharges to $10.9M (vs $13.6M); rates −5.9%, volumes −4.1% .
Brokerage margin pressure: revenue −4.9% YoY to $28.1M; operating loss $(2.2)M with OR 107.9% as revenue per load fell 21.9% despite load count +20.1%; management actively rightsizing and cutting costs .
Elevated depreciation hit margins: revised salvage lives (used Class 8 residuals down to 20–25% of historical cost) added $11.3M depreciation in Q2, impacting operating ratio by 245 bps .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$412.6	$491.9	$462.2
Net Income ($USD Millions)	$23.6	$52.5	$30.7
Diluted EPS ($)	$0.90	$1.99	$1.17
Operating Income ($USD Millions)	$36.4	$75.1	$47.1
Operating Margin (%)	8.8%	15.3%	10.2%
EBITDA ($USD Millions, non‑GAAP)	$55.8	$96.9	$84.8
EBITDA Margin (%)	13.5%	19.7%	18.4%
Consensus Revenue ($USD Millions)	N/A*	N/A*	N/A*
Consensus EPS ($)	N/A*	N/A*	N/A*

Note: S&P Global consensus estimates were unavailable due to request limitations. Values retrieved from S&P Global.*

Segment breakdown (Operating Revenues and Income from Operations):

Segment	Q2 2023 Revenue ($M)	Q1 2024 Revenue ($M)	Q2 2024 Revenue ($M)	Q2 2023 Op Inc ($M)	Q1 2024 Op Inc ($M)	Q2 2024 Op Inc ($M)
Contract Logistics	$208.8	$313.5	$263.6	$32.8	$81.5	$52.9
Intermodal	$91.6	$76.7	$78.1	$(0.2)	$(8.0)	$(8.3)
Trucking	$81.2	$69.7	$91.4	$4.4	$3.7	$4.4
Company‑Managed Brokerage	$29.6	$31.0	$28.1	$(0.8)	$(2.5)	$(2.2)

KPIs by segment (ex‑fuel revenue per load where applicable):

KPI	Q2 2023	Q1 2024	Q2 2024
Contract Logistics – # of active value‑added programs	68	71	68
Contract Logistics – Avg value‑added direct employees	5,569	5,480	5,230
Intermodal – Loads	112,925	105,037	108,326
Intermodal – Avg rev per load ex‑fuel ($)	$590	$566	$555
Intermodal – Avg tractors	2,159	1,758	1,656
Trucking – Loads	45,717	41,691	40,620
Trucking – Avg rev per load ex‑fuel ($)	$1,646	$1,508	$2,115
Trucking – Avg tractors	905	830	815
Brokerage – Loads	17,814	21,556	21,396
Brokerage – Avg rev per load ($)	$1,599	$1,381	$1,249

Balance sheet highlights and cash items:

Cash $7.5M; marketable securities $11.6M; debt $487.8M; Q2 capex $77.1M; dividend declared $0.105/share (payable Oct 1; record Sep 2) .
Net interest‑bearing debt (ex leases) to reported TTM EBITDA 1.65x; interest expense guide $30–$32M for FY24 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q2 2024	$450–$475 (given on Q1 call)	Actual $462.2	Met range
Operating Margin (%)	Q2 2024	9–11 (given on Q1 call)	Actual 10.2	In‑range
Revenue ($M)	Q3 2024	N/A	$450–$475	New
Operating Margin (%)	Q3 2024	N/A	9–11	New
Specialty program revenue cadence ($M)	Q3 & Q4 2024	~$25–$45 each (Q1 call)	~$40–$50 each (Q2 call)	Raised
Capex ($M)	FY 2024	$480–$500 (Q4 2023 call)	$315–$330 (Q2 call; same as Q1)	Lowered vs initial
Interest expense ($M)	FY 2024	$30–$34 (Q4 2023 call)	$30–$32 (Q2 call)	Narrowed
Dividend ($/share)	Quarterly	$0.105 (Q1)	$0.105 (Q2)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’23, Q1’24)	Current Period (Q2’24)	Trend
Contract Logistics specialty program	Launch and large capex underpin; ~$228M 2024 revenues; cadence Q2: +$53–$75M; Q3/Q4: $25–$45M	Q2 recognized $44.6M; raised cadence to $40–$50M for Q3/Q4; ten straight quarters of double‑digit margins	Strengthening
Intermodal conditions	West Coast losses; accessorials down; CA optimization; AB5 compliance emphasized	Volumes −4.1%, rates −5.9%; accessorials/fuel surcharges down; June best monthly results outside CA; potential tariff pull‑forward, peak season rate uplift	Cautious improvement
Trucking specialized heavy‑haul (wind)	Full book expected later in year	Revenue per load +28.5%; pipeline full; secular tailwind; correction: a “good headwind” meaning positive driver	Positive
Tariffs/macro and port labor	Watching Red Sea/Panama impacts; potential East↔West shifts	Potential H2 uplift from tariff pull‑forward and East Coast labor concerns	Potential near‑term tailwind
Regulatory/legal (AB5)	Strong CA compliance stance	Continued emphasis on compliant operations, ready for market shake‑outs	Supportive
Nearshoring/Mexico	Growing footprint; launches; pipeline	Ongoing opportunity across trucking/value‑added with customer expansion	Structural tailwind
Sustainability/EV	Plan to add EV trucks in CA	EV fleet integration announced for Intermodal (Peterbilt 579EV in SoCal)	Execution underway

Management Commentary

“Once again Universal delivered exceptional results in an otherwise turbulent transportation and logistics environment… Contract logistics led the way delivering double‑digit operating margins for the past ten consecutive quarters… We are going to keep our foot on the gas.” — CEO Tim Phillips .
“During the quarter, Universal took an $11.3 million charge [in] depreciation… residual values [are] now 20% to 25% of historical costs… impacting our operating ratio by 245 basis points.” — CFO Jude Beres .
“We could see a strong second half of 2024 if 2025 volumes get pulled forward in anticipation of higher tariffs on imports… expect [intermodal] spot rates to increase into peak season.” — CEO Tim Phillips .
“Value‑added and dedicated opportunities alone account for nearly $750 million… enables us to be selective.” — CEO Tim Phillips .
“Excluding lease liabilities… net interest‑bearing debt to reported TTM EBITDA was 1.65x.” — CFO Jude Beres .

Q&A Highlights

Contract logistics pipeline and program count: 68 programs at quarter end, normal cadence of contracts rolling off; pipeline $600–$750M; sales cycle consistent, with transportation bids more pressured than value‑added .
Depreciation change rationale and Class 8 outlook: used tractor residuals unwound post‑COVID; concerns on oversupply; expect OEM pricing to reflect oversupply eventually; adjustment prudently aligned balance sheet .
Intermodal demand vs West Coast import strength: uplift seen flowing into Chicago; June had highest load counts YTD ex‑California; cautious given below‑market pricing by some carriers .
Heavy‑haul wind clarification: management emphasized it’s a positive secular tailwind supporting trucking results .

Estimates Context

S&P Global consensus estimates for Q2 2024 revenue and EPS were unavailable at time of analysis due to request limitations; therefore, comparison to Street consensus could not be provided. Values retrieved from S&P Global.*
Implication: Given ULH’s actual Q2 results fell within its Q2 margin guidance and revenue cadence tied to the specialty program, near‑term Street models may lift Contract Logistics margin forecasts and increase Q3/Q4 specialty program contribution; intermodal/brokerage margins likely remain conservative until rate normalization is evident .

Key Takeaways for Investors

Contract Logistics remains the core earnings driver with sustained 20%+ operating margins; specialty program cadence was raised for H2, supporting Q3/Q4 visibility .
Trucking’s specialized heavy‑haul wind business is a differentiator driving pricing/revenue per load; expect continued support even if broader truckload remains soft .
Intermodal appears to be bottoming ex‑California with June improvement; watch for tariff‑related pull‑forward and peak season spot rate upticks to narrow losses in H2 .
Expense discipline and revised depreciation reflect conservative asset valuations; margin optics in Q2 were impacted by a non‑recurring accounting adjustment, not operational deterioration .
Guidance is credible: Q3 revenue $450–$475M, margins 9–11%; full‑year capex lowered to $315–$330M vs initial $480–$500M, interest expense $30–$32M; dividend maintained, supporting shareholder return .
Strategic catalysts: robust new business pipeline (~$750M), nearshoring in Mexico, and sustainability initiatives (EV deployment in SoCal) can drive medium‑term growth and margin quality .
Trading setup: focus on Contract Logistics margin durability and H2 specialty program revenue recognition; monitor intermodal rate/volume inflection and any East Coast labor developments as potential H2 sentiment drivers .

UNIVERSAL LOGISTICS HOLDINGS, INC. (ULH)·Q2 2024 Earnings Summary