Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you address what your customers are saying about different tariff scenarios on Canada and Mexico, and quantify the risk of potential plant closures? A: Jude Beres, CFO, explained that Universal's foreign exposure to tariffs is minimal, with Canadian and Mexican businesses comprising only about 3% to 3.5% of their 2025 guidance. While there could be impacts from supply chain challenges, no specific guidance has been given. Tim Phillips, CEO, added that they are well-positioned in Mexico and globally to handle any potential disruptions.
Q: There seems to be a more pronounced seasonal degradation in contract logistics margins from Q3 to Q4. Can you explain the impact of the Parsec acquisition on this? A: Jude Beres noted that Parsec historically had 8-12% operating margins, but purchase accounting for GAAP reduces this to 1-2%. This, along with reduced plant operations in dedicated transportation, impacted margins. They plan to focus more on EBITDA as a performance measure due to these accounting impacts.
Q: What are the specific drivers of the challenges in the intermodal segment, and what is the path to improvement, especially in Southern California? A: Tim Phillips highlighted new leadership and sales teams, technology upgrades, and cost rationalization efforts in Southern California. They are focusing on customer engagement and operational efficiencies to improve the segment's performance, with expectations for progress in 2025.
Q: On the trucking demand side, was the Q4 increase project-related or core demand, and will it continue into 2025? A: Tim Phillips attributed the Q4 demand increase to the specialized heavy haul wind division, which is expected to continue due to investments in equipment and customer relationships. They have seen increased bid activity in early 2025, indicating potential sustained demand.
Q: Is there a risk to the wind business from regulatory changes, and what is the impact on operating expenses? A: Jude Beres stated that current projects are not on federal land, so they do not expect regulatory impacts. The increase in personnel costs was mainly due to the Parsec acquisition, which added 2,100 employees. Other operating expenses were largely related to the specialty development program.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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