Hello and welcome to the Universal Truckload Services Inc First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. During the course of this call, management may make a few forward-looking statements based on their best views of the business as seen today. Statements that are forward-looking relate to Universal's business objectives or expectations and can be identified by the use of the words such as believe, expect, anticipate and project. Such statements are subject to uncertainties and risks and actual results could differ materially from those expectations. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jeff Rogers, Chief Executive Officer; and Mr. David Crittenden, Chief Financial Officer for Universal Truckload Services Inc. Thank you. Mr. Rogers, you may begin.

Thanks Sean. Good morning. Thank you for joining us today for Universal Truckload Services' first quarter 2015 earnings conference call. Now let's get right to the numbers. From a top line perspective, revenue was down 5.7% for the first quarter over last year's first quarter. Several factors contributed to the drop in revenue and those include, the reduced fuel prices which are a significant portion of our transportation related revenue, the slowdown in steel and metals hauling, oil and gas related services and GDP. The weather was also a factor, but it impacted us differently than last year. Our business models did allow us to hold or even improve our margins, as volumes declined rapidly in the first quarter. The impact to transportation was significant, down 10.8% to $160.4 million, it now represents 60.9% of our overall revenue. Transportation remains our largest business, including best in class truckload, heavy haul, and niche transportation hauling like GE's new 180-foot wind blades, which we will begin hauling in the third quarter. The contraction in steel and metal hauling, as cheap foreign steel hit U.S. ores, and a slowdown in the oil and gas energy group has been a significant hit to our first quarter revenue, and we now expect this to have a lasting effect through most of the year to come. Capacity is still a key issue for the industry, and our growth is limited by the number of drivers we can recruit. We have added significant resources to improve our capacity development, and I am pleased with the increased activity, which will lead to more drivers. Brokerage also suffered, as the overall market softened, and spot rates drifted down for the first quarter. But we still expect our brokerage business revenue to grow at better than 25% year-over-year. Dedicated transportation…

Thank you, Jeff. Good morning everyone. Universal reported first quarter 2015 net income of $8.2 million on consolidated revenues of $263.6 million. Earnings per share were $0.27. Revenues were just above the midpoint of the range we anticipated in our April 1st press release. Earnings per share on a revised revenue forecast, were also in the range indicated four weeks ago. Consolidated first quarter operating revenues were 5.7% or $15.8 million lower than in the first quarter of 2014. Despite almost 10% growth in our intermodal services and overall flat revenues in our value-added services, our first quarter revenues were weighed down by a 10.8% decline in revenues from transportation services. Following an abrupt reversal of demand and pricing trends for our truckload services, and ongoing trends in our dedicated transportation services. When compared to the fourth quarter of 2014, Q1 revenues from our transportation services were down 17.8%, driven by expected seasonality, softer pricing and lower diesel surcharges. Our average length of haul quarter-over-quarter was up 2.5%, but that was offset by a 9.3% decline in the number of loads. That compares to a 3.2% quarter over prior quarter decline one year ago. Average revenues per load, excluding fuel surcharges were down 6.8%, highlighting the impact of the decline in high rated, flatbed and heavy haul moves on revenues from this operation. First quarter 2015 revenues from value added services were flat, compared to the fourth quarter of 2014. As Jeff indicated, our continuing value added operations are supported by solid 2015 forecast from our automotive and large truck customers, and Universal's logistics performance later this year will be helped along by the new operation Jeff mentioned. Although up 9.3% from last year, intermodal revenues were actually down 12% from the proceeding quarter, primarily due to a 10.3% drop…

Your first question comes from the line of Chris Wetherbee from Citi. Your line is open.

Good morning guys. This is Alex Hahn in for Chris.

Hey Alex.

Hi. Just wondering, would you say the lower than expected demand in February and March for [indiscernible]. Is that indicative of demand throughout the year, and can you give us an insight on how April fared?

This is Jeff. April was very-very similar to what we saw in the first quarter. I think from a flatbed -- what's going on with the steel environment and the heavy haul, I think that's going to continue for a while. A lot of that -- you've got the oil and gas issue, so I think that's going to continue. So to say it, I don't know is that going to continue through the whole year, to be honest, I am not sure anybody knows what's going to happen for that length of time, but I do see the continued trends right now that we saw in the first quarter.

Okay. That's helpful. And as a follow-up, where do you see the opportunity to improve margins and performance, as demand stays sluggish and are you guys progressing towards your full year targets given in February?

From a margin perspective, yes, I still feel very confident with what we said. There is a lot of little -- it’s a lot of additions of small things within that model, that maybe have not been looked at for quite some time. So we are going to look at every opportunity we see to drive, whether it be through assessorials, whether it be through how we engage with customers. We talked about the growth of company terminals, who we feel we had the opportunity to drive higher margins in that growth segment. Even though the growth is stagnant, if we still continue to grow that as a higher percentage of the total, I think we have the ability to drive margins that way. But I still feel very-very confident in the ability to improve our margins in the truckload segment.

I might just add, if you look at what -- Jeff did mention, in terms of the full year expectations, they fall very close to what they were last year. So in the transportation business, we have only looked for like 50 to 100 basis point improvement in those costs this year as incremental improvement. And then in the logistics business, if we fix the dedicated business, it will be an immediate improvement to the aggregate margin in that segment and in those businesses.

Okay, great. That was very helpful. I will turn it over.

Your next question comes from the line of Aaron Reeves from BB&T Capital. Your line is open.

Hey, good morning guys.

How're you Aaron?

Not much, just had a few questions for you. Wanted to focus first on transportation services; I know you mentioned that these trends are probably going to continue. But I am curious to know, do you think the growth in transportation revenues can get flat at some point this year? I mean, I noted down, like maybe almost 11% in Q1; but as we get to maybe Q3 or Q4, could you see it maybe turning positive or at least flat?

I would sure hope we can, but we will just see how things play out this year. Really, a lot of that depends on what happens in the steel environment. Housing starts kick off again, which we know, we are very-very sluggish in the first quarter, that can have a lot to do with what we do from a flatbed perspective. Who is to say what's going to happen in the oil and gas industry, but the expectation is, I know, we are starting from a big hole, but I know what Mark and the team in transportation is trying to shoot for. And it is still -- even though the volume is down, there is still an issue out there with drivers, and I feel that as we add drivers, we will have the ability to grow more and I do feel confident that we can do that. So the expectation would be, yeah to try to get back to at least flat, but we will see how the year plays out.

Okay. And then I have got a similar question on the value added side, obviously, your revenues are up about 1% in the quarter. Could we start to see that maybe accelerate later in the year? I know we expect some contracts to kick in, but could we start to see some mid-upper single digit growth as we get into the back half of the year?

Absolutely. If you remember, we guided the full year of 3% to 5%, and we expected the first quarter to be about where it was, it came in kind of where we thought. So we absolutely expect it to accelerate in the back half, as these new businesses that we are adding and we have got some other ones in the pipeline that I think are going to come on. So absolutely, it will accelerate, and we still feel very comfortable that for the full year, we will be in that high 3% to 5% range.

All right. And just one more question, this kind of goes back to the oil and gas exposure, could you just quantify that again for us? I am trying to remember what it was, what you said last year? I just wanted to make sure, I got that right?

The way I think we talked about it is, the entire energy segment was about 7%. Of that, a lot of it was the GE win, which really didn't have anything to do with what's going on in the oil exploration business. And I think we said somewhere around 3% potentially was the exposure, which I still think, is there. It sure seems and felt like it -- the impact of it is a hell lot more than that, in the first quarter, I will be honest with you. But from just a total piece of the pie, it's not that big. But I think there is just broader things going on in that flatbed environment, having to do with what I talked about the Chinese dumping steel and how that was moved around, we didn't play in a lot of the transportation of that at all. So I think there is just some other things going on, that are really impacting the flatbed and heavy haul environment.

All right. And could you just give us a couple of anecdotes from what you're hearing from your industrial customers?

You know, Class-A truck is still strong. I think they are projecting this year to still be a solid record year. I think next year it is starting to soften and what they are projecting into 2016. Automotive is still strong. Case New Holland, which is a very large customer of ours, is experiencing some softness for sure, but all in all, it's very mixed, depending on what area the industrial is playing in.

All right. Thanks a lot. I will hop back in the queue.

[Operator Instructions]. Your next question comes from the line of [indiscernible] from Wolfe Research. Your line is open. Sir, your line is open.

Good morning. Sorry I was on mute. Thanks for taking my question.

That's all right. Good morning.

Just a quick question, just following on, on kind of the weakness in the truckload division. I was wondering if you had kind of a breakdown by month, January, February and also into April, in terms of both pricing and volumes.

We certainly do, but we typically don't share that information actually. I think what we can say though is that, the trends that we are talking about, actually we started talking about at the end of March, started to really become obvious, midway through February. As we started the year, we were engaged in a lot of internal changes and focused on that. But the pricing and demand trends started to become obvious to us, kind of midway through February. As Jeff just said, we were very interested over the last four weeks, to figure out whether it was broader general economic trends. I think we all saw the GDP come out yesterday, well, it was a surprise to a lot of folks. We probably started seeing evidence of that five or six weeks ago, and now that's why, it's going to be really important for us, to see how the residential and commercial real estate development activity picks up in May and June. I don't think we have seen it yet, and so four weeks from now, we might have better visibility to that. But there was clearly a point of inflection, that started emerging kind of midway through the quarter.

Okay. And you said that this kind of continued through April as well, right?

Yes. Pretty much the same thing.

Okay. And just another question on kind of your revenue pre loaded mile, is there a -- I noticed there was 7.9% growth in fuel, 5% net of fuel, is there any kind of difference between kind of contractual pricing and your spot pricing?

Absolutely. I mean, last year results had strength in the spot market which drove a lot of the pricing increases, which is much softer now than it was, and a business shift. Last year, your steel and wind energy or heavy haul created a much higher revenue per mile, than what we are seeing now, as those constrict and go down, then that obviously impacts your revenue per mile indices. So it's really a change in mix that's driving a lot of that pricing change as well.

Okay. Any sense on, I guess the split, percentage-wise year-over-year between your contractual pricing, and your spot pricing?

As far as [indiscernible], I don't have that in front of me. We will have to get back with you.

Okay. Sure. Okay, that's all I have. Thanks for taking my questions.

You bet.

There are currently no further questions at this time. Presenters, I turn the call back to you.

Well once again, we sure appreciate you joining and your interest in Universal, and everybody have a great day.