Hello and welcome to Universal Logistics Holdings Third Quarter 2023 Earnings Conference Call. [Operator Instructions] 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 risks and uncertainties and actual results could differ materially from those expectations. As a reminder, this conference is being recorded. It’s now my pleasure to introduce your host, Mr. Tim Phillips, Chief Executive Officer; Mr. Jude Beres, Chief Financial Officer; and Mr. Steven Fitzpatrick, Vice President of Finance and Investor Relations. Thank you. Mr. Phillips, you may now begin.

Thank you, Nick and good morning and welcome to Universal Logistics Holdings 2023 third quarter earnings call. Third quarter was a tale of two tapes. Our Contract Logistics Group navigated late-quarter market disruption with outstanding performance, while headwinds continue to hamper our intermodal and brokerage segment. Our Truckload segment outperformed expectations with a strong showing from its specialized services group. I am extremely proud of our employees, contractors and agents who continue to provide superior customer service to our diversified customer base. While individual segments of ULH are facing various challenges, our experienced management team has been able to adjust and shine the light on best practices with the path forward for our associates and customers. We continue to make headway in the electric vehicle space with various automotive manufacturers. Major investments in this space will shape the future landscape of the automotive industry. Understanding the changing landscape, Universal will continue to invest in technology and human capital to address these future needs. There will be challenges along the way such as the current UAW strike at the Big 3 and Mack Trucks. While not immune from the impact of striking locations, the majority of our contracts do contain fixed and variable pricing components, which helps us absorb some of the shock of these unpredictable events. We understand labor is searching for their footing in a changing environment, but remain hopeful an agreement can be reached with all in the near future. Our Transportation & Logistics segment performance looked very similar to Q2 with Transportation continuing to experience the adverse impact of inventory destocking as customer demand for goods remains tempered. Falling in line with demand, transportation pricing also remains under pressure with our transactional business still bumping what we hope is at or near the bottom of the cycle.…

Thanks Tim. Good morning everyone. Yesterday, Universal Logistics Holdings reported consolidated net income of $23 million or $0.88 per share on total operating revenues of $421.3 million in the third quarter of 2023. This compares to net income of $48.5 million or $1.84 per share on total operating revenues of $505.7 million during the same period last year. For comparison purposes, please note the third quarter of 2022 was the peak of the trucking cycle for Universal and reflected the highest ever reported results in our history. Consolidated income from operations was $36.8 million for the quarter compared to $69.8 million 1 year earlier. EBITDA decreased $27.6 million to $56.7 million, which compares to $84.4 million during the same period last year. Our operating margin and EBITDA margin for the third quarter of 2023 are 8.7% and 13.5% of total operating revenue. These metrics compare to 13.8% and 16.7%, respectively, in the third quarter of 2022. Looking at our segment performance for the third quarter of 2023, in our Contract Logistics segment, which includes our value-add and dedicated transportation businesses, income from operations decreased $300,000 to $35.1 million on $208.1 million of total operating revenues. This compares to operating income of $35.4 million on $209.5 million of total operating revenue in the third quarter of 2022. Operating margins for the quarter were 16.9%, matching last year’s margin, which was also a record in our Contract Logistics segment. On to our Intermodal segment, operating revenues decreased $67.8 million to $86.6 million compared to $154.4 million in the same period last year. And income from operations decreased $32.5 million to an operating loss of $4.3 million. This compares to operating income of $28.1 million in the third quarter of 2022. Operating ratios for the quarter were 105% versus 81.8% last year. As…

[Operator Instructions] First question will be from Bruce Chan of Stifel. Please go ahead.

Hi. Good morning team. This is Matt Milask on for Bruce. Just wanted to – I know you mentioned in the prepared remarks, you saw some volume attrition resulting from UAW late in the quarter. I just wanted to know if you could provide any more color as to what’s going on there and if you think the rate of disruption might change meaningfully going into next quarter. Thanks.

Yes. Matt, this is Tim. Yes, we did see some disruption coming out of the third quarter as individual plants went down week-after-week. I think they made a difference tailing out of the quarter in the operating results, and we will carry some of that into the beginning of the fourth quarter. It is our hope because we are not in the negotiations that there would be a near-term resolution to it. And you saw one of those of the big three come out with this week, and we are hoping that the others follow suit. So, I think that was taken into consideration also as we looked at what we thought our fourth quarter performance was going to be.

Okay. Fair enough. Secondly, could you provide just sort of your maybe general outlook for the industrial economy moving into next year?

Yes. The general outlook from what we know and what we have heard from our customer base, if I start on the over the road or the truckload transportation group, we know that in steel and some of the industrial equipment that we traditionally move on, flatbed did take a dive in the third quarter. We expect that to remain kind of the picture or the roadmap at least in the fourth quarter heading into Q1. If I look beyond just the domestic transportation, from an international standpoint, we definitely saw a slowdown in some of the industrial type of products that we import. Well, we move that is imported into the country. So, I expect that kind of aligns with it from our customer base that the industrial space will continue to see a slower type environment. I can’t predict next year exactly, but I would think that Q4 and Q1 will experience some headwinds.

Okay. Great. Thanks for the color. And lastly, would you be able provide sort of the new normalized earnings power bogey for the company at this point? Thanks.

Hey. This is Jude. So historically, we have talked that in a normal operating environment, we should be around $1 a share a quarter. But obviously, we don’t have a normal operating environment, right, in the middle of a freight recession and of course, the headwinds that we are now experiencing with UAW. But you kind of saw last year, I mean we had peak earnings of over $6 a share. So, that would probably be the ultimate earnings power of the company at this point for our scale at the current size that we are. But I mean $1 a share, we think is kind of a baseline in a normal operating environment with upside from there.

Great. Thanks a lot.

Thank you.

[Operator Instructions] This concludes our question-and-answer section. Now, I would like to turn the call back over to Mr. Tim Phillips for closing remarks.

Thank you, Nick. The current landscape presents some challenges, but with disruptions will come opportunity. Universal will be positioned to take advantage of these opportunities. I appreciate everyone calling in and I look forward to talking to you again for the Q4 earnings call in February of 2024. Thank you and have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.