Hello, and welcome to Universal Logistics Holdings Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Should you need assistance, please hang up the conference specialist by pressing the star key followed by zero. A brief question and answer session will follow the formal presentation. During the course of this call, management may make forward-looking statements based on their best view of the business as seen today. Statements that are forward-looking relate to Universal's business objectives and/or expectations and can be identified by the use of the words as belief, expect, anticipate. Such statements are subject to risks and uncertainties and actual results could differ materially from those expectations. As a reminder, this conference is being recorded. And it is now my pleasure to introduce your host, Mr. Tim Phillips, Chief Executive Officer, Mr. Jude Beres, Chief Financial Officer, and Mr. Steven Fitzpatrick, Vice President of Finance and Investor Relations. Thank you. Mr. Phillips, you may begin.

Thank you, Yna. Good morning, everyone, and thank you for joining Universal's fourth quarter 2024 earnings call. Our results demonstrated how Universal's diverse service offerings continue to set us apart in the transportation and logistics industry. Against the persistently weak freight backdrop, our comprehensive logistics solutions have once again driven exceptional performance. Before delving into the details, I want to take a moment to acknowledge the incredible efforts of the entire Universal team. The dedication and hard work of our ten thousand plus employees and contractors are the foundation of our success. It is the commitment of each team member that enables us to consistently deliver outstanding services to our customers and maintain our position as a leader in the transportation logistics industry. Now let's discuss the quarter. Universal once again delivered solid results in the fourth quarter 2024. We grew top-line revenues by 19% and our earnings per share of $0.77. For the full year 2024, Universal reported $1.85 billion in revenue, 11% in operating margins, and $4.93 in earnings per share making 2024 the second-best full financial performance in Universal's history. While I'm pleased with Universal's overall performance, results continue to vary across reporting segments. Our contract logistics business continues to be a standout performer consistently achieving double-digit operating margins and serving as the cornerstone of our success. Our trucking segment has also delivered strong results. Despite ongoing weakness in the truckload market, demand for our specialized heavy haul wind business remains robust driving trucking to its highest operating margin in over two years. We expect this momentum to continue. However, our intermodal segment remains a challenge. Performing below expectations, that said, we are highly focused on reducing cost and improving efficiencies and our efforts are yielding results. The fourth quarter was the second straight quarter of positive…

Thanks, Tim. Good morning, everyone. Yesterday, Universal Logistics Holdings reported consolidated net income of $20.2 million or $0.77 per share on total operating revenues of $465.1 million in the fourth quarter of 2024. This compares to net income of $21.4 million or $0.81 per share on total operating revenues of $390.9 million during the same period last year. Consolidated income from operations was $38.3 million for the quarter, compared to $34.1 million one year earlier. EBITDA increased $18.7 million to $73.5 million which compares to $54.8 million during the same period last year. Our operating margin and EBITDA margin for the fourth quarter of 2024 are 8.2% and 15.8% of total operating revenues. These metrics compared to 8.7% and 14% respectively in the fourth quarter of 2023. Looking at our segment performance for the fourth quarter of 2024, in our contract logistics segment, which includes our value add and dedicated transportation businesses, income from operations increased $7 million to $39.1 million on $307.4 million of total operating revenues. This compares to operating income of $32.1 million on $201.3 million of total operating revenue in the fourth quarter of 2023. Operating margins for the quarter were 12.7% of total operating revenues compared to 15.9% one year earlier. Included in the contract logistics operating results was $6 million of depreciation and amortization related to Parsec. Which lowered the fourth quarter 2024 operating margin in this segment by 200 basis points. During the fourth quarter of 2024, we completed our specialty development program and recognized an additional $51.3 million of operating revenue. During the period. For the full year 2024, we recognized total operating revenues on the program of $228 million. Revenues generated from this program were reported in value-added services and the associated costs in operating supplies and expense. The results of…

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You would hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the pound key. If you are using a speakerphone, please the handset before pressing any keys. One moment please for your first question. Your first question comes from the line of J. Bruce Chan from Stifel. Please go ahead.

Hey, good morning, guys. Thanks for the questions here. Maybe just starting from the top. I know there's been a lot of news flow on the automotive OEM side, and you guys usually get some pretty good visibility into production. So thanks for the call there. But, you know, maybe if you could just address you know, what your customers are saying as far as the different tariff scenarios on Canada and Mexico, And I know it's early and hard to say, but if we think about you know, kind of a worst-case scenario here, would that you know, maybe look like a 2021-esque scenario where we see plant closures. You could just help us to maybe, you know, quantify the risk there. Bruce, I'll start. So first of all, our Canadian business is only about $10.5 million of annual sales, and our Mexican business is just south of $50 million. So Universal's foreign exposure to tariffs is not very big. Right? So around 3% to 3.5% of our 2025 guide. That being said, I mean, I think similar to what happened in, you know, during strikes or, you know, when there were some challenges in the supply chains and there's a lot of components that come from either overseas or from I about those items, you know, I would expect that if there are any challenges at the border or any challenges on tariffs that relate to a specific component, it definitely could impact us, but I don't really think we have any insight into that as of right now. Yeah. Bruce, this is Tim. I would agree with that. All of our conversations with our customers that have really shown what Jude just said. There's been no real guidance, but we feel comfortable in everything that we have…

Thank you. Once again, should you have a question, please press star four by the one on your telephone keypad. We have a follow-up question from J. Bruce Chan from Stifel. Please go ahead.

Alright. Great. Well, second bite of the apple. It's alright. The plenty of questions here. You know, just on the trucking demand side, you know, nice little bump up in the fourth quarter. Any sense of whether that was, you know, project-related or recovery-related or is that more, you know, core demand that you think could stick around, you know, in the first quarter, into the early part of 2025? Yeah. We probably both could comment on this, but the demand in the fourth quarter especially, was driven by the wind division. We continue to see opportunities based on the fact of our execution and also the fact that we've invested a lot in the equipment to make sure we stay current and provide the customers with the newest equipment to move their freight. I see that being because we're putting a lot of effort into it. We're putting a lot of effort into the specialized piece of the truckload, and we're putting a lot of effort to make sure we stay connected with the customers to see that freight continue. We've seen a little bit better first quarter so far in the wind environment, so we're happy with that. We've still seen a drag on rates on, you know, your standard van and flatbed. But the promising point on the truckload other than the specialized is we've seen a real good increase in the bids coming in that we've had the opportunity to review. So the bid activity has in the first four or five weeks of the year. K. So is there a risk to that wind business from some of the regulatory and policy changes? You know, far as what you're hearing from customers, or does that seem okay at this point? Right now, Bruce, it seems…

Thank you. We have taken a strategic and thoughtful approach on who we want to be. And what it will take to get there. We have a deep focus on providing a customer-centric approach in segments that allow us to truly integrate in our customer supply chain. We believe this offers our customers a high level of support and builds a level of stickiness which will ultimately support our long-term value to our shareholders and employees. Thank you, and I look forward to catching up on our Q1 earnings call in late April.

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.