Universal Logistics Holdings, Inc. (NASDAQ: ULH) reported Q1 EPS of $0.45, $0.06 better than the analyst estimate of $0.39. Revenue for the quarter came in at $382.16 million versus the consensus estimate of $383.2 million.

"Given the deteriorating operating environment caused largely by the COVID-19 pandemic, Universal put up some pretty solid results in the first quarter of 2020," stated Tim Phillips, Universal's Chief Executive Officer. "We started off the year with high expectations, but as the virus overwhelmed our international trading partners, particularly China, and then rapidly spread here at home, it became increasingly apparent that the negative impact would last longer than everyone originally predicted.

"From a service line perspective, the pandemic has impacted and continues to impact each one differently. For example, our intermodal drayage operations supporting the ports in Southern California were impacted early as slower than normal port activity extended through the normal Chinese New Year and beyond. The spread of COVID-19 eventually caused China to shut down much of its manufacturing and exporting activities, and the anticipated spike in post-Chinese New Year activity never materialized. As the virus hit our shores, the resulting pandemic led to a significant decline in domestic demand, and a spike in blank-sailings. With loads down over 40%, our Southern California intermodal operations experienced first quarter 2020 revenue declines of $8.2 million and $2.7 million in lower operating income compared to the same period last year.

"Our truckload transportation services were hardest hit much later in the quarter as demand fell across many of the industries we serve, including retail, automotive, industrial, and steel and metals. There were a few bright spots, however, as demand for consumer goods, including food and beverage, remained robust throughout the quarter. Although the timing of a recovery remains uncertain, as stay-at-home orders are lifted, we expect retail and manufacturing activity to come back on-line and the demand for transportation services supporting them to increase.

"One of the most significant headwinds impacting Universal came in late March with the shuttering of North American automotive and heavy-truck production. In connection with numerous plant closings, our dedicated transportation and value-added services supporting these operations came to a standstill. We remained in constant communication with our customers, and as decisions to close operations were announced, we quickly aligned our staffing levels to match customer requirements. This meant cost cutting and furloughing employees across our workforce. While several of our value-added service contracts contain fixed and variable fees, we anticipate that the loss of production will significantly impact our dedicated transportation and value-added services until commercial activity returns. We estimate the loss of customer production during the last two weeks of the quarter to have reduced our revenue and operating income by $8.3 million and $2.6 million, respectively.

"I am encouraged to report we have heavy-truck production gearing up at one of our customer's facilities, and based on the current outlook, we expect most North American automotive and heavy-truck operations we support to resume over the next several weeks. While we do anticipate fewer shifts and lower production compared to pre-COVID-19 levels, we expect to be in a position to support production ramp-up and believe Universal's variable cost model will allow us to grow profitability during the recovery.

"Given the current operating environment and the uncertainty caused by the COVID-19 pandemic, we are withdrawing our previously issued earnings outlook for 2020. We are also temporarily suspending our regular quarterly dividend. We have implemented numerous cost-saving initiatives across the organization and anticipate scaling back our planned capital expenditures for the remainder of 2020. While we expect there to be near-term challenges, I believe we have deployed the right strategies to ensure Universal can weather these uncertain times and position ourselves for long-term success. We remain committed to doing our part to make certain the critical goods and services the country needs are delivered, while staying focused on the safety and well-being of our employees, contractors and customers."

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