Universal Logistics Holdings, Inc. (ULH) Q2 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Universal Logistics Holdings, Incorporated Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Tim Phillips, Chief Executive Officer. Please go ahead, sir.

Good morning and thank you for joining Universal Logistics Holdings' second quarter earnings call. To start with, I would like to extend a big thank you to the hard-working associates throughout the Universal family. We have successfully navigated many of the supply chain disruptions that were prevalent throughout much of the quarter. Your efforts and a cannot fail attitude, have continued to deliver strong results for our customers and valued shareholders. Walking our way out of the COVID pandemic has presented many challenges for the transportation and logistics space. However, we have also seen significant opportunity both in the warehouse and on the road. It's clear there will be a continued restocking of inventory, and there appears to be plenty of appetite by the customer. Your efforts have bridged these gaps, which have effectively supported our customer supply chain. Now for the quarter. In yesterday's release, Universal reported second quarter earnings of $0.95 per share on total operating revenues of $422.8 million. Second quarter operating revenues reflect Universal's highest quarterly revenue ever reported and exceeded our own estimates for the quarter. On an earnings per share basis, our results fell in line with our previously issued guidance after adjusting for nonoperating gains. Top line revenue growth is a reflection of our previously mentioned contract logistics wins and a strong transportation pricing environment. Overall, I'm very pleased with the recovery in each of our operating segments as we lap the heights of the global pandemic. However, we are not immune to many of the challenges that the industry is currently experiencing. While demand remains strong for Autos and Class 8 trucks, the continued chip shortage, a prolonged UAW strike at a heavy-duty truck manufacturer, supply chain disruptions and increased launch costs kept our contract logistics group from achieving its top and bottom line potential. As we mentioned in the release, contract logistics was adversely impacted by $5 million of losses associated with one of our recent launches. We experienced staffing challenges and wage pressure in conjunction with customer production schedule, which was far lower than previously forecast. Our customer ramps – as our customer ramps up and out of the extended launch phase, we anticipate improving volumes, which will translate into better results for us. I'm cautiously optimistic on the second half will improve as chip shortages and supply chain disruptions begin to stabilize. Additionally, we continue to add our wins in the Contract Logistics segment, securing an additional $22.5 million of annual business in this quarter. We anticipate these wins to be in full run rate in Q1 and Q2 of 2022 and many of these wins are our new customers in the Industrial, Aerospace and EV verticals. In our Intermodal drays segment, we experienced 28.6% year-over-year revenue increase and also saw an improvement sequentially. The drayage market has been experiencing some ongoing challenges as congestion at the ports and rails, combined with availability of equipment, adversely impact fluidity of the containerized freight. To combat these challenges and further enhance our ability to recruit, we have worked with our customers to increase rates. Some of these rate increases are reflected within the results but not all. On average, we have increased our rates in Intermodal – to Intermodal customers about 14%. The second half will continue to be challenging, but we have positioned ourselves well with our customers to move into peak season. Our company managed brokerage operations remain disciplined and continues to balance contractual and spot freight in a market riddled with capacity constraints and influenced by premium pricing. While revenue was up 58% year-over-year, the number of loads being handled decreased by 20.8%. We continue to focus on rationalizing our lanes to ensure acceptable level of profitability. Our aim is to capture consistent gross margin and we made significant progress, finishing the quarter north of 12% in gross margins. The increased revenue was driven by higher spot market rates and better contract pricing. Currently, 99.4% of our freight is running under new rates that would be business rated in the first half of 2021. Looking ahead to the second half, we anticipate to reprice approximately 21% of our brokerage business. Our Trucking segment experienced both top and bottom line growth, highlighted by driver and contractor count increases. The Truckload group saw the average rate to our customer increased by about 3.5%. I'd like to point out that this is an average. Rates are up as seen in our other company managed brokers results. This quarter, 2021 experienced a bit of a weakness in our wind energy business, excluding wind, our rates were actually up about 20%. We anticipate sustained tightness in our customers' inventories and capacity throughout the industry for the near-term, which continues to position us for additional rate increases with our customers. We have recently received very positive outlooks for our win customers and the second half looks robust. Which should have a positive effect on both our top and bottom line coming into the quarters. With ever-increasing burdens for small fleets, our agency based franchises continues to offer competitive alternatives to entrepreneurs looking to excel in the transportation industry and our efforts are paying off. In the second quarter, our agent-based division was successful in onboarding 16 new agents. Universal is truly a people driven company. Every associate is significant and holds an important role in our success. Operational excellence is dependent on each team member contributing while navigating a demanding environment. I respect the hard work and efforts shown by all the Universal team members, and I thank you for your continued efforts. I would now like to turn the call over to Jude. Jude?

Thanks, Tim. Good morning, everyone. Universal Logistics Holdings reported consolidated net income of $25.6 million or $0.95 per share on total operating revenues of $422.8 million in the second quarter of 2021. This compares to net income of $6.2 million or $0.23 per share on total operating revenues of $258 million in the second quarter of 2020. As mentioned in the press release, during the second quarter of 2021, Universal recorded a $5.7 million pretax gain or $0.16 per share related to a favorable legal settlement. Consolidated income from operations was $31.3 million for the quarter compared to $10.8 million one year earlier. During the second quarter of 2021, Universal reported all-time record highs for revenue, operating income as well as EBITDA. EBITDA increased $22.6 to $53.7 million, which compares to $30.2 million one year earlier. Our operating margin and EBITDA margin for the second quarter of 2021 are 7.4% and 12.7% of total operating revenues. These metrics compare to 4.2% and 11.7%, respectively, in the second quarter of 2020. Looking at our segment performance for the second quarter of 2021 in our Contract Logistics segment, which includes our value-add and dedicated transportation businesses, income from operations increased $15.2 to $15.9 million on $154.8 million of total operating revenues. This compares to operating income of $800,000 on $71.8 million of total operating revenue in the second quarter of 2020. Operating margins for the quarter were 10.3% versus 1% last year. As mentioned in Tim's comments and our release, our contract logistics business incurred a $5 million loss in the second quarter at one of our launches supporting an automotive OEM. We expect a similar loss in the third quarter, but moving closer to breakeven as the quarter progresses. In our Intermodal segment, operating revenues increased 28.6% to $106.6 million compared to $82.9 million in the same period last year. Income from operations also increased $1.4 million to $6.2 million. This compares to operating income of $4.7 million in the second quarter of 2020. Operating margins for the quarter improved marginally to 5.8% in the second quarter of 2021 compared to 5.7% during the same period last year. Both driver and equipment shortages as well as the lack of port and rail fluidity continue to hamper the results of this segment. In our Trucking segment, which includes both our agent-based and company managed trucking operations, operating revenues for the quarter increased 58.4% to $99.8 million compared to $63 million in the same quarter last year, while income from operations increased 80.4% to $6.5 million. This compares to operating income of $3.6 million in the second quarter of 2020. In our company managed brokerage segment, operating revenues for the quarter rose 51.3% to $60.4 million compared to $39.9 million in the same quarter last year, while income from operations also increased $700,000 to $2.4 million. This compares to operating income of $1.7 million in the second quarter of 2020. Operating margins for the quarter were 4% versus a 4.3% margin last year. On our balance sheet, we held cash and cash equivalents totaling $13.1 million and $7.9 million of marketable securities. Outstanding interest-bearing debt net of $1.3 million of debt issuance costs totaled $432.2 million at the end of the period. Excluding lease liabilities related to ASC 842, our net interest-bearing debt to reported TTM EBITDA was 2.3x. The capital expenditures for the quarter totaled $12 million. As Tim mentioned in his comments, the availability of equipment, including the procurement of new equipment has been extremely challenging. As a result, we are lowering our forecasted capital expenditures now to be in the $40 million to $50 million range before any additional business wins in our Contract Logistics segment and strategic real estate purchases. We expect to make up for this year's equipment deficit by increasing our capital spending next year. Interest expense for the year is expected to come in between $12 billion and $14 billion. If the business environment remains stable for the third quarter of 2021, we are expecting top line revenues between $420 million and $450 million and operating margins in the 7.5% to 8.5% range. Additionally, while we are reaffirming our full year guide on total operating revenues between $1.6 billion and $1.7 billion, we are now lowering our top end 2021 expected operating margins by 100 basis points from 7% to 9% to now between 7% and 8%. Launch losses in our contract logistics service line as well as continued operating challenges within our Intermodal business are the primary reasons we tightened our expected operating range for the full year. Turning to our dividend. Yesterday, our Board of Directors declared Universal's $0.105 per share regular quarterly dividend. This quarter's dividend is payable to shareholders of record at the close of business on September 6, 2021, and is expected to be paid on October 4, 2021. Finally, in yesterday's release, Universal also announced its Board of Directors has authorized a new stock repurchase plan. Under the new plan, we are authorized to repurchase up to 1 million shares of ULH common stock in the open market. With that, Jamie, we're ready to take some questions.

Thank you. [Operator Instructions] The first question comes from the line of Chris Wetherbee with Citi.

Hey, guys. Good morning. James on for Chris. The first question I have really involves what you're seeing and how you're thinking about the recovery. It sounds like you're thinking about sort of the status quo or steady state from here on out when you're thinking about the guidance and your results for the full year. But just wanted to get your – get your perspective on the trends you're seeing and sort of you're seeing weakness or particular strength. Just trying to understand sort of like your perception of risk to the upside or downside based on the outlook and the trends you're seeing in the freight market broadly?

Yes. Hey, this is Jude. So yes, we're expecting the truckload market to still be robust on the rate side and the volume side. Obviously, we're going into peak season. So on the brokerage side, we all know what that can do to capacity and to rate for some constraint but we're still expecting that operation to operate within kind of a similar margin to what we had in the second quarter. On the intermodal side, I think we're bullish on a lot of the things that we've heard from our customers and the freight that we have onboarding in Q3 and in Q4 as it relates to peak. So we're expecting some additional margin out of that business in, in the coming quarters in the back half. And then in our contract logistics business, excluding the $5 million headwind that we have had in Q2 in the $5 million headwind that we have in Q3 related to that singular launch loss, I mean, that business really still performed really, really well and would be at historical margin had it not been for that particular launch – excess launch costs. So of course, there's risk with everything. I think we're all hearing in the news about COVID lockdowns and all that kind of stuff in half coming back. So we really don't know what's going to happen there. But as far as looking at the business as it is today and projecting it out over the next 60 to 90 days, we feel pretty good about it. We just have to have some cleanup in our contract logistics business, and we expect to get back to that run rate of 7% to 9% – or that 8% to 9% like we were originally planning for the back half of this year.

Yes. And to follow-up on that point around the margins. Are you seeing like wage pressure coming through at all this year that's impacting the margins? Have you largely been able to pass it through? Or is this something that really you could probably see flowing through our results in 2022? Just trying to understand sort of that dynamic within your costs would be great as well.

Yes. This is Tim. Yes, we've seen some recent wage pressure. And just related to the launches that Jude was speaking to, some of this waste pressure is within the last three or four months. There's been some turnover in some operations. We've been forced to go out and source new individuals. The wages that we're having to pay are escalating. And it's also creating some training and some mentorship issues. So yes, I see wage – I see people and wages being a headwind that we will have to deal with on a basis through the second half of 2021 and probably into 2022. And what we're doing is we're rationalizing every operation, looking at the wages, what percentage increases we feel we're going to have to pay out to get it to where we need to be to get that employee. And then we'll execute a plan to go back and collaborate with our customers on what it's going to take to make sure their freight is moved through the supply chain in an efficient manner.

Got it. And as we think through that, what is your outlook for essentially start-ups across sort of basically the back half of this year, but also into 2022 and might that slow because of the wage pressure, like essentially could hiring hamper your ability to take on volume or is it really just essentially a margin headwind?

Well, yes, I think it's two things. I don't only think it's wage pressure. I also think it's the individual employees in that market that want to be in the space. So we have had some of that marketing going on to make sure we have a pipeline of people. The other thing that plays into our potential wins and where we launch I think some of the wins that we've had over the last couple of months have been in various markets around the United States. At some point, we had a pretty high concentration in particular markets that made it extremely more challenging because we were in a saturated market, trying to find people, whereas we have branched out a little bit in different verticals that spread us around the country. I won't kid you and say, do we think there's going to be problems in finding qualified people? I'm going to say yes. But I do know in the next upcoming launches we have already won, we're already taking a proactive approach with the customer and with the market and trying to get ahead of that curve because it's taking a little longer defined qualified individual. I think the biggest point to this, where we will find some potential erosion of potential wins as on the transportation side. As we look at the availability of drivers in particular markets. We haven't shut any of the pipelines down. We've just been tremendously optimistic about how we're going to rate to them, to make sure that we can go to market with a rate that's respectable, not the wage that we can pay that's going to attract what is in the market because the market isn't overflowing with available candidates both on the road and on the dock.

That makes sense. And actually, that leads me to the next question, which is really around the truckload market and how you're thinking about it. You talked about the repricing opportunity. Like as we think about basically what you're going to be doing across the back half? And potentially, if you do see a normalization across 2022, should we see sort of a significant margin expansion, assuming that essentially, the truckload market starts to normalize and capacity comes back across 2022. Just trying to understand sort of like what you would expect. If that were the case, how would you expect margins to react in 2022 relative to 2021?

Well, I don't have the complete crystal ball for 2022. And I wish if someone does they dial me up and give me some insight on that, we see things pretty much, as you had mentioned, coming out of the second or going in and coming out of the second half of 2021, we still see rates escalating with our customers, we still see demand on the wage side of it. I'm pretty comfortable saying that as we exit into the first quarter of 2022, we're going to be in a similar situation. But I mean, I think others have probably rationalized and said that at some point of 2022, things will start to come back to more of a normalized market. And if things do come back to a normalized market, much of our capacity on the truckload side is run through owner operators, too. So it's run through a variable cost structure, which I'm somewhat comfortable that – as that said, it will equalize itself, should we have to run through a normalized market. We'll have to play that hand on the company truck drivers as we get there. But right now, for the next at least couple of quarters going into 2022, I see a sustained demand on wages, and I also see collaboration with customer on rate increases.

Got it. And then I guess in terms of intermodal, the ability to – like congestion's a hot topic, obviously, the ability to source capacity and what you're seeing there. Are there any sort of sort of incremental headwinds that you could think about across the back half? Are you expecting sort of more challenges or less? Just trying to understand sort of like what you're seeing relative to your own business versus the entire market. Across the back half when it comes to intermodal and capacity?

Okay. Yes. Well, Intermodal as a whole for Universal Logistics Holdings is really centered around the dray piece of it, holding it from ports and rails to the ultimate customer. So what we've seen in the first half of the year, I expect to continue to see in the second half of the year. That is congestion at ports and rail. That is equipment shortage with chassis in particular markets, a continued drive to recruit owner operators and drivers. And what we see and what we've seen in past hot markets on the van side is a lot of it – we're competing against the van carriers for these drivers and contractors. And many cases, a van driver is going to make a little bit more money than a drays driver. So we see some defections, and it's a lot harder to recruit in these markets. And then also, back to labor, we talked about labor as a whole, not only how it affects us, but think about how it's affecting the supply chain and customers. We're seeing an increased dwell time on the customer end that even adds to that equipment shortage problem. So I see those continuing to be a problem as we strive to get extra amount of moves per driver per day for an optimization. So the result of that, you're going to see continued pressure on getting in and out of the rails, which is you've got to watch your demerge and peg cost and you have a reduced utilization on your power units. So we'll continue to recruit hard. We have specific department set up to do that and focus on grade drivers because we're going to need more of them potentially to do the same amount of work we did last third quarter at the same time. This is his unfortunate truth. And when we watch the dwell times at the major ports and rails, and I'm not pointing any negative figures there towards them, but we're starting to see things escalate upwards. We track the data from our own drivers, DLVs, and we're approaching on average over a 1.5 hour weight at ports and rails, and that can expand up to 4 hours depending on what major market it is. And how pinched it is. And now you're starting to see more shift to anchor. You're starting to see the flag going up in the port of L.A. and Long Beach that they're going to see a high level of volume, we just have to be prepared for it. And the other thing we're doing is a little different maybe than most on the drayage side is we're trying to – and June had mentioned our CapEx. Well, the back half of this year, we're focusing because we can get chassis, we're going to go out and get more chassis. I'm not sure the exact count yet, but it will be close to 1,000 chassis that will add to our fleet already. Doesn't solve the problem everywhere, but we'll filter those into major markets to help our customers address their supply chain problems. And as the chassis leasing market still remains tight. So we'll continue that strategy for the rest of this year, and we'll look at it again next year if it makes sense.

Yes. So it sounds like based on how you're describing at least the charges that leads to your – definitely positioned to sort of – or at least you think you're definitely positioned to outperform sort of the broader trends in the fact that you can actually still get equipment and some level of – and you actually can still garner some level of drivers, which is obviously a positive. But is there anything else to be thinking of broadly? Or is when it just basically comes to that, the ability to source capacity is really just the ability – or is it really relying on those two aspects? Is there any sort of like contract or anything else to be thinking of? Just anything beyond that would be great. And that would…

Yes. I think on the contractor and driver end, I'll be honest, it's like a fistfight you watch. And it's every day we come in and we start – in some days, timing now, we're hitting our head against the wall. But we start contacting, using our resources. We have resources not only centrally located in corporate. We have boots on the ground at all facilities that are out there navigating the local landscape. And it's up to us from an operational standpoint because I think there is going to be – many times, they're going to go where they're going to make the most money. And not in all cases, is it drays right now. So it's just going to be a fistfight. And then internally, we got to look at how we can optimize the best of our ability. That's what I mean in some of the remarks and we talk about having additional runway, I still think there's some internal optimization that we can do. Even if it's as simple as matching imports and exports better and doing some of those things internally that allow us twist a few knots but I'll tell you this, the knots don't have a lot of distance to go until some of this congestion and equipment allocation lighten up because we're spending a lot of time sitting without the wheels turning on the road.

Got it, perfect. Thank you.

[Operator Instructions] Your next question comes from the line of Bruce Chan with Stifel.

Hey gents. Good morning and thanks for the questions here.

Hey, Bruce.

Maybe just to start out on the contract logistics side. I think, Tim, and Jude you guys talked about that $5 million onetime loss at the start-up. Just want to get a little bit more color on what's going on there. Is that sort of an atypical event where you didn't anticipate something and kind of got stuck with it? Or are there typically some of these costs involved in large new project wins that we should start to think about as you see some good demand for that product going forward?

Yes. Hey Bruce, it's Jude. So yes, we saw very similar things when we launched operations in 2015, 2016 and 2017. This particular one, as Tim mentioned, in his previous comment that with the labor, the amount of labor that we needed in a singular market, it obviously pose a number of challenges and being able to recruit and retain the right number of people to get into that operation. And then you couple that with the chip shortage and the customers' production for that facility being down anywhere between 30% and 40% of where we were expected to be at this time. It's the combination of those two things. So I think this one, it was going okay up until about May. And then in June, it's just like exploded. So we're kind of in the same situation that we were with some of these other ones, where you kind of have about two quarters where it kind of takes to work itself through, we're already working through the headcount and the hours, the excess equipment and the people. So that's why in my comments, I mean, we're expecting about a similar loss of another $5 million CapEx particular operation in Q3. So August will be better than July and then September should be close to breakeven. We're hoping by the end of the quarter, but more to come. A lot of it is out of our hands just because of the chip shortage and the customer's inability to get their production up.

Okay, great. And that’s really helpful.

And Bruce, I'll add to that. I think that what we've experienced in the past and how we face it now, the only real difference from a blueprint and a game plan has been the labor market, and it's not a normal labor market when it comes to hiring labor on the dock. So we – in some cases, we've even added some additional staffing on the dock to cover for call offs. And the other thing that you can't measure in your launch template is the quality and experience of an individual, you try to hire all experienced individuals. But I'd be remiss – I'll be lying to you to say that they're out there in big numbers. So not only have we had some turnover, rehiring, we've also had to implement some additional training and mentorship programs to bring those individuals along so they can have a level of success in what I'll call a very intricate supply change solution for our customers. So we're all running as hard as we can right now. And as Jude had said, we have a plan to get to where we need to be, we just have to execute every day.

That’s really helpful. And then just if I think about how the margins in contract logistics for legacy business stacks up against some of these new wins that you're seeing outside of this exceptional labor market, are they fairly similar? Do they tend to be a little bit better because you have a better bargaining position relative to some of the big OEMS? Or are they a little bit worse because maybe you don't understand the business as well at the outset?

Bruce, this is Jude. No, I mean we would just say that we're bidding everything as to historical value-add margins. I mean, as we've learned in that business over the years, there's a lot of risk in doing them. They're long-term contracts, the labor that's employed is transient and risky. So no, we're going after all these new business wins at the historical margins that we expect for that legacy contract logistics business.

Okay. Perfect. So no change to those longer-term margin targets, even if you start to accelerate that contract win rate?

No, that is correct. And as Tim mentioned in his comments, in some cases, we're going back to the customer before we're launching and requesting labor rate increases because we test the market and say, hey, we can't hire at those wages, while we have to go back and get increases before we start.

Okay. That's super helpful. And then just one last question here, maybe on the company brokerage side. It seems like you've got a much higher percentage on the new rate business than some of your peers out there, but maybe you're a little bit lower on the load development. So just kind of thinking through your strategy in company brokerage, do you have any change in thoughts around what you want to get out of this business on the revenue side and the margin side versus some of the targets that you've laid out in the past, I mean, you're running at 4% now versus that kind of 1% to 3% target range. So is there a kind of maybe an interest in running a smaller business but a more profitable business? Anything there to think through?

Yes. I would think you hit it on the head there. It's called, we'd like to be a $1 billion-plus if it was intelligent. So it's called intelligent growth with what the market will give it. So as we've said, we're rationalizing our rates. We're rationalizing our percentage of spot contractual. And we're trying to position it so we can be successful on a continued basis. And as you noticed in the prepared remarks, we basically touched all of our customers in the first half of the year. And in some cases, that wasn't because if the contract was up. It's because we had to go back and talk about a joint solution of how we're going to continue to supply capacity to meet their needs. So there's been some heavy lifting and a lot of homework done. I wouldn't expect us to see a shrink. I would just be to say we're going to grow intelligently, but we're trying to drive that margin into that 4% to 6% range that we've always chirped about wanting to be. And to do that, and it's kind of hard because you see so much opportunity out there for a win, right? There is a ton of workflow into the system. But we've told our people, you got to be disciplined in how you approach it. And yes, we will grow, but we're going to grow at those margins that we've been preaching about for a long time. So still a ton of work to do, but I think we have the machine kind of head in that direction. And I think that it's a firm but fair approach that not only do we win, but our customer wins because we're providing a good service.

Yes. Because that sub $500 million or, call it, sub $250 million size range is pretty tough for brokerage. So I'm wondering, as you think about capital deployment and especially M&A, I mean, is there any appetite there to grow inorganically in brokerage?

No. This is Jude. There is no – I mean, we can grow that business as fast as we want to grow it just by lowering our price, right? So I think just echoing Tim's comments, I mean the – we're running – we've been running a different play for the past couple of years where we have our company managed brokerage and our company managed truckload operations, working together on sales for customers and trying to have a combined pool of great brokerage customers that translate into great trucking customers as well. So we're just going to continue to grow that thing, as Tim said, incrementally, but really focused on both sides on the company truckload operation and the company brokerage operation on optimizing lanes in order to optimize profit.

Okay. Perfect. Thank you for the time.

Thanks for you too.

And there are no other audio questions – excuse me, you do have a question from the line of John Rolfe with Crescent Rock Capital.

Hi, good morning guys. Just one quick question. Why the decision now to re-up on the repurchase authorization, given that you still had, I think, sort of 300,000-plus shares out? And is there any read-through vis-a-vis that decision in terms of the M&A pipeline and what you might or might not be seeing there currently?

Yes, for sure. Yes, this is Jude. So I mean, we – right before COVID, we had a repurchase in place, and it only took us a month to burn through about 350,000 shares. So it was just the feed with which those share – we were able to buy those shares back on the open market. So just to be safe, we just went to the Board and asked them to reload the authorization that we had before, which was from a pretty long time ago, it's from like 2014. So we're talking seven years out, but we've kind of gotten serious about the buybacks over the past couple of years. So it was really just because it didn't take us a long time to buy back shares in the open market last time, and we wanted to make sure that if the EV/EBITDA was right that we were in the market playing that. Playing that form of our capital allocation strategy. The M&A market, I mean, it has picked up considerably. I mean, we have – we're probably getting stores for deals a week from across the transportation spectrum from intermodal to truckload, through contract logistics opportunities. It's just that Universal historically has been super picky about what we want to buy and what customer verticals and markets that we want to play in. And so we just – we let a lot of pitches passed. I mean we don't swing at a lot of things, but when we do swing, we go after things pretty hard. And if you remember, since 2018, we acquired about six businesses in the Intermodal drayage space. We spent about $250 million in doing that to really beef up the regionalization of that business and the density of that business and of course, onboarding some great customers to boot. So we're expecting the same things with the current round of M&A. And as things progress, I mean, you'll hear more from us.

Great. Thank you, guys, appreciate it.

Thank you.

Thank you.

And there are no other audio questions at this time.

Well, thanks for everyone's interest in Universal Logistics Holdings, and we look forward to talking to you next quarter. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.