Hello and welcome to the Universal Logistics Holding Inc.'s First Quarter 2016 Earnings Conference Call. The company Universal Logistics Holding Inc. was previously known as the Universal Truckload Services Inc. 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 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 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, Mr. Jude Beres, Chief Financial Officer and Mr. Steven Fitzpatrick, Vice President of Finance and Investor Relations for Universal Logistics Holding Inc. Thank you. Mr. Rogers, you may begin.

Thanks Susan. Good morning. Thank you for joining us today for our first call as Universal Logistics Holding Inc. Last quarter we started the conversation about changing our name to Universal Logistics Holdings a name that better describes who we are and what we do. Yesterday 99.9% of the shareholders voted in favor of the name change. Universal Logistics Holdings clearly defines our structure a holding company for multiple business units including trucking and transportation, intermodal operations, expedited freight, truckload brokerage, and of course, value added logistics. Together we are logistics and whatever the customers logistical need we have a solution. In connection with our new name, we are expecting to being trading under our new ticker ULH beginning on Monday, May 2. Also today you will notice our prepared remarks will be brief. I believe the investment community gains more insight from good Q&A, so we have plenty of time for that. We continue to drive change across the organization. Joining today on the call are Jude Beres and Steve Fitzpatrick. This is Jude's first call as our Chief Financial Officer. Jude has been with Universal for a little over a year as our Chief Administrative Officer, but he has spent more than two decades with other related companies. He has the experience and skill set that I was looking forward to assist me on our continued journey of driving improved financial performance here at Universal. Jude will be presenting additional information on our first quarter so you will hear from him directly in a few minutes. Steve has been with Universal for almost 10 years in our finance and accounting department. He has been promoted to the roll of VP of Finance and Investor Relations. He along with Jude and I, hope to improve our external communications and…

Thanks Jeff. Good morning, everybody. Here are some highlights from our earnings release. Universal Logistics Holdings recorded first quarter 2016 net income of $7.5 million or $0.26 per share on total operating revenues of $260.4 million. This compares to net income of $8.2 million or $0.27 per share in the first quarter of 2015 on total operating revenues of $263.6 million. Consolidated income from operations decreased $1.1 million to $13.9 million compared to $15.1 million in the first quarter of 2015. EBITDA decreased 6.8% to $22.5 million in the first quarter of 2016, which compares to $24.1 million one year earlier. Our operating margin and EBITDA margin for the first quarter of 2016 are 5.3% and 8.6% of total operating revenues. These metrics compares to 5.7% and 9.1% respectively in the first quarter of 2015. Looking at our segment performance, in our transportation segment, which includes our legacy truckload, intermodal, NVOCC and freight brokerage business income from operations decreased 7.3% to $5.9 million from $6.4 million in the first quarter of 2015, operating revenues for the quarter totaled $157.5 million down from $167.2 million in the same quarter last year. In our logistics segment, which includes our value add logistics business dedicated transportation as well as Westport Axle, income from operations decreased 2.6% to $8.5 million on $102.6 million of total operating revenues compared to $8.8 million income from operations on $96.2 million in total operating revenue in 2015. On our balance sheet, we held cash and cash equivalents totaling $11.7 million and marketable securities of $13.4 million, outstanding debt totaled $233.4 million. We are projecting interest expense for the year to be $8.2 million and cash paid for interest to closely follow what we were expensing quarterly. Capital expenditures for the quarter totaled $36 million, we expect this year's CapEx to be in the $80 million range, $60 million for transportation, intermodal and material handling equipment and $20 million for value add startups. And finally, our Board of Directors declared Universal $0.07 per share regular quarterly dividend. This quarter's dividend is payable to shareholders of record at the close of business on May 9, 2016 and is expected to be paid on May 19, 2016. Susan, we are ready to take some questions.

Great .[Operator Instructions] Your first question comes from the line of Chris Wetherbee of Citi. Your line is open.

Hi, good morning, this is Prashanth in for Chris.

Good morning, Prashanth.

Good morning, want to take the opportunity to say hello to Jude as well and congratulation.

Thank you.

You're welcome. First question guys on transportation obviously macro environment is sluggish in 1Q, I just wanted to get a sense of now that you've close that last piece of the unprofitable business and renegotiated the $16 million contract, where are we in run rate wise in terms of margin and how are you thinking about cadence as we get towards the back half of the year?

Yes. If you look at the dedicated piece, we're probably on track to be about $90 million full annual basis from a revenue perspective and I would say this year the margins are probably going to be around 4% to 5% for the year for this year. We do expect to move that higher next year as everything kicks in and what we've done, but for the year we're probably in the 5% range from a market perspective on the dedicated piece.

Okay. It's helpful. And I want to talk a little bit about intermodal, then, the rates the fuel we're holding up pretty steadily through the quarter you talked about the pressure at the end there, just wanted to get some color on where the pressure is coming from and is this -- how meaningful the step down could we see or its just a little bit of a hiccup and otherwise longer term pricing growth?

Well, the pressure is really -- if you look at our intermodal business 50% of the volumes are really in the spot market, I think everybody knows what's going on in the spot market from a transportation perspective, it's just very, very difficult pricing wise. So we did see, the rates were pretty good January, February, and then, March they seem to really come down and we're seeing that same pressure in April numbers. So I'm looking for the price to probably be weaker in the near-term probably in the next couple of quarters and its really from the spot market more than anything, contractual rates are still holding firm but that's the nature of those and spot is what it is, but I do expect the rates to actually get worse over the next couple of quarter.

Okay.

Like pricing changes pretty rapidly in the spot market, so who knows by the end of the year I think it really kind of just depends on what happens with capacity.

Okay, appreciate it, makes sense. Just a last one on the labor cost the value added on the large project. How much of that do you expect to continue in 2Q and -- and how should we think about labor for the full year in your guidance?

Right. If you look at we've been talking about this large project for quite a while because it is a big -- someone we've talked about for several quarters unfortunately -- the great thing what we're seeing in automotive is the SUV and light truck those got -- the OEMs do not want to stop producing, so they're running those assembly plants all the time. So that inhibits -- keeps us from implementing this major change, you want to try to do them on weekends and the expectation was we would have finished that implementation by the end of last year unfortunately they didn't want to shut down the assembly plant so we had to make changeovers and try to incorporate all of the change and implementation whenever we could squeeze in a day and it just happen to stretch it out into February. The final implementation is now completed, it's actually done over Easter weekend which actually is -- was in March I take that back. But so that's behind us. We saw significant improvement as we went from January to February, February to March and we're expecting and seeing significant improvement in April. So we do feel like that significant pressure on our margins is behind us, second quarter will be much better than what we saw in the first quarter for that project and that did put a drag on our margins for sure but we do think that's behind us.

Excellent gentlemen, thank you so much for the time. I'll turn it over.

You bet.

[Operator Instructions] Your next question comes from the line of Kelly Dougherty [Macquarie]. Your line is open.

Good morning, guys. Thanks for taking the question and congrats again Jude. We heard a number of companies talk about how the intermodal profile work is challenged by aggressive TL pricing and new capacity and something versioned back to truck. So just wanted to think about intermodal has obviously been good grower for you guys recently, is there a concern about this current backup slowly map down and if not what is it that's unique about your business that kind of insulates you from that?

Couple of things Kelly, good morning. We've grown our truck count so much last year and are reporting on 18% increase in drivers and our capacity with trucks, so there is a certain aspect of that even though we know there is less volume, but because we've increased our capacity in trucks there is going to be some growth that we think we're going to get just from that and keep in mind our intermodal is over 80% really inbound range. So even though there may be some convergence from rail back to truckload or things like that and a lot of things going on with intermodal, we're a little bit insulated from that conversion because we really just play in that range market and then we've got a little bit of storage and M&R but that's really not impacted so much by the conversion. So I guess we look at it and say that the potential shift doesn't really impact us that much and we still look for growth this year, but there has clearly been a decline as the quarter played out and what we're seeing in April from a volume and rate perspective. So while I reiterated the fact that we still think we're going to see that growth in the mid-single digits and I still believe that but its going to be bumping and there is going to probably be just some tough comparisons because last year's second quarter was so strong because of all the labor issues on the West Coast for us that shifted a lot of volumes to the East Coast, which is where we have the vast majority of our depos and all of our volumes. But I still expect growth it's just definitely going to be muted and bumpy I think for the next couple of quarters.

Thanks. That's helpful. Actually goes into the next question I had, you kind of think about the amount of drivers that you added and how do you think about the balance of keeping them busy moving loads versus what we're seeing from a pricing perspective and maybe you're not seeing it as much I guess on the intermodal pricing side. But, if you look at an 18% truck growth count versus mid-single digit expectations to grow that business, how do you keep all those drivers easy and happy and paid?

Very carefully, I'd clarify it as -- I was just downstairs before the call talking to Tim Phillips our President of Intermodal and we we're talking about, because he settled 100 motor drivers last weeks than we did the previous year, which is a little over 10%, 12% more drives. So even though we've added 18% more trucks not all of them got settled last week, but it was a significant number higher. So I think what he is really focused on and what we've talked about in the past is, spreading it out clearly the settlements and what a driver is earning on a weekly basis is less than what they earned last year for the same week just because it is in the pricing and what they're being settled for a load is so much lower, but we really are working hard because we think that's the key to try to keep that capacity engaged and working as much as we can because its going to come back the rates are going to turn out we all know that if its fourth quarter or third quarter beginning of the next year as things tighten up from a year-over-year capacity perspective. So, it is a balancing act, but I feel so far we're doing a pretty darn good job of keeping all of our drivers busy even though they're not making as much just because the rates are so low.

Okay. Great, thanks. Just one more, switching gears a little bit to the dedicated side, what kind of customers do you have or may be more importantly are you targeting in that business? I know there is good concentration on the auto side, but are you looking to perhaps move more into retail or other kind of consumer dependant industries to diversify a bit away from the industrial manufacturing side of things?

Yes. I mean actually all of our dedicated customers right now are automotive, that's all we do. And keep in mind that business kind of started years ago as a supplement to the value add and logistical work for the OEMs that we do here in the -- it kind of expanded out to other locations, but its really with OEMs that we do other value add logistical support force or its kind of an add on. We are still doing business with the OEMs, but we're being very specific as to what the rate and margin that we expect so we're not taking all of this. We could actually do a hell of a lot more dedicated, but its just not -- it just doesn't pay enough to make it for a while in my opinion. So we are going to and are aggressively looking out with our sales folks to look for other opportunities that would probably outside of Detroit because that's been the main focus area for us, but we think it isn't going to be in the consumer goods and retail space we've got some very good relationships with retail customers and we're exploring dedicated opportunities with them but its definitely going to be more in the consumer goods type space I believe.

Okay. Great. Thanks for the time guys.

You bet, Kelly.

There are no further audio questions at this time. I turn the call back to the presenters for further comments.

Okay. Well, we thank you so much for your support and we will talk to you next quarter.