Universal Logistics (NASDAQ:ULH) Holdings, Inc. (NASDAQ:ULH) has announced the closure of its subsidiary, Universal Capacity Solutions, LLC (UCS), which provided third-party freight brokerage services. The decision, part of a strategic move to focus on the company's core priorities, was made public on August 20, 2024, with the termination effective as of today.
The Warren, Michigan-based company communicated the closure to approximately 125 employees at the UCS Nashville, Tennessee location on August 20, 2024. Of these employees, 112 were let go on the same day, and the remaining staff is expected to be terminated by September 13, 2024.
Universal Logistics anticipates incurring pre-tax charges between $6.0 million and $7.0 million related to the shutdown. These charges include severance, related costs, goodwill impairment, and other charges, with cash expenditures projected to be between $2.0 million and $3.0 million. The majority of these costs are expected to be recognized in the third quarter of 2024.
In other recent news, Universal Logistics Holdings has made significant strides in both its operations and financial performance. The company has entered into a notable sublease agreement with Ford Motor Company (NYSE:F) to construct a 1,000,000 square foot warehouse and distribution center to support Ford's upcoming electric truck production. The facility, to be built by Universal Logistics' subsidiary, Universal Development of Tennessee, is expected to be completed by 2025.
In the financial realm, Universal Logistics reported a robust Q2 2024 performance, with a 12% increase in revenue and a 30% rise in earnings per share year-over-year.
This growth was largely driven by the company's contract logistics segment, which posted a 26.2% revenue increase. Despite challenges in the intermodal and company-managed brokerage segments, Universal Logistics remains optimistic, actively pursuing acquisitions and anticipating increased spot rates in the truckload market.
Looking ahead, Universal Logistics projects Q3 revenues between $450 million and $475 million, with operating margins ranging from 9% to 11%. The Dedicated Transportation businesses increased income from operations to $52.9 million, and the specialty development contract logistics program is expected to generate approximately $228 million by year-end 2024.
InvestingPro Insights
In the wake of Universal Logistics Holdings, Inc.'s strategic decision to close its freight brokerage subsidiary, investors may find it useful to consider some key financial metrics and insights provided by InvestingPro. With a current market capitalization of $1.1 billion, the company is trading at a low earnings multiple of 8.57, suggesting that its stock might be undervalued relative to its earnings. This is further supported by an adjusted P/E ratio of 8.76 for the last twelve months as of Q2 2024.
Despite the recent operational changes, Universal Logistics has demonstrated a commitment to shareholder returns, maintaining dividend payments for an impressive 14 consecutive years. The dividend yield stands at 1.06%, with the last dividend ex-date recorded on June 3, 2024. Moreover, analysts predict the company will be profitable this year, which is consistent with the company's performance over the last twelve months.
InvestingPro Tips highlight that Universal Logistics has been profitable over the last year and has seen a strong return over the last five years. These factors, combined with the company’s consistent dividend payments, may appeal to investors seeking stability and steady income. For those interested in deeper analysis, InvestingPro offers additional tips to guide investment decisions.
For more detailed insights and further InvestingPro Tips, interested individuals can explore the full range of analysis available at https://www.investing.com/pro/ULH.
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