WARREN, Mich. - Universal Logistics (NASDAQ:ULH) Holdings, Inc. (NASDAQ: ULH) has announced the acquisition of Parsec, LLC and its associated entities, a leading provider of terminal management services to railroads in North America. The deal, valued at $193.6 million, is expected to immediately enhance Universal's contract logistics segment, potentially increasing its annualized revenues to over $1 billion.
Parsec, which has been partnering with railroads for over 35 years, operates at more than 20 rail yards across the United States and Canada. With a workforce of nearly 2,100 employees, the company specializes in container lift on and lift off services, as well as crane and intermodal equipment repair, drayage, and container and chassis stacking. In the trailing twelve months ending August 31, 2024, Parsec reported operating revenues of $230.2 million.
Universal's CEO, Tim Phillips, expressed enthusiasm about the acquisition, citing the opportunity to build on Parsec's strong customer relationships and expand Universal's service offerings in the rail terminal services sector. The transaction is anticipated to provide Universal with a significant presence in this area.
The acquisition's cash purchase price is subject to customary post-closing adjustments. Legal advisors for Universal included Dykema Gossett PLLC and Vistula PLC, while Livingstone Partners acted as the exclusive financial advisor to Parsec, with Katz Teller providing legal advice.
Universal, a holding company whose subsidiaries offer a range of transportation and logistics solutions in the United States, Mexico, Canada, and Colombia, aims to provide scalable supply chain solutions to meet changing customer demands. This acquisition is a strategic move to enhance Universal's portfolio of services, which includes truckload, brokerage, intermodal, dedicated, and value-added services.
This news article is based on a press release statement from Universal Logistics Holdings, Inc. and includes only factual content without endorsements or speculative language.
"In other recent news, Universal Logistics Holdings reported a strong financial performance in Q2 2024, with a 12% increase in revenue and a 30% rise in earnings per share year-over-year. Significant growth was seen in the company's contract logistics segment, which posted a 26.2% revenue increase. Despite some challenges in the intermodal and company-managed brokerage segments, Universal Logistics remains optimistic about its future.
In another development, Universal Logistics announced the closure of its subsidiary, Universal Capacity Solutions, a freight brokerage unit. This move is part of a strategic decision to focus on the company's core priorities. The company anticipates incurring pre-tax charges between $6.0 million and $7.0 million related to the shutdown.
In a major move, Universal Logistics entered into a significant sublease agreement with Ford Motor Company (NYSE:F). The company's subsidiary, Universal Development of Tennessee, will construct a 1,000,000 square foot warehouse and distribution center to support Ford's upcoming electric truck production. The facility is expected to be completed by 2025.
Looking ahead, Universal Logistics projects Q3 revenues between $450 million and $475 million, with operating margins ranging from 9% to 11%. The Dedicated Transportation businesses increased income from operations to $52.9 million, and the specialty development contract logistics program is expected to generate approximately $228 million by year-end 2024. These are the recent developments in Universal Logistics Holdings."
InvestingPro Insights
Universal Logistics Holdings' acquisition of Parsec aligns well with the company's strong financial performance and growth trajectory. According to InvestingPro data, Universal Logistics has demonstrated impressive revenue growth, with quarterly revenue increasing by 12.02% in Q2 2024. This growth is likely to be further bolstered by the Parsec acquisition, which is expected to add significantly to the company's contract logistics segment.
The company's financial health is underscored by its attractive valuation metrics. With a P/E ratio of 8.86, Universal Logistics is trading at a relatively low earnings multiple, suggesting potential undervaluation. This could indicate that the market has not fully priced in the potential benefits of the Parsec acquisition.
An InvestingPro Tip highlights that Universal Logistics has maintained dividend payments for 14 consecutive years, reflecting the company's commitment to shareholder returns. This consistent dividend policy, combined with the company's expansion strategy, may appeal to investors seeking both growth and income.
It's worth noting that Universal Logistics has shown strong profitability, with an operating income margin of 11.69% in the last twelve months as of Q2 2024. This robust profitability could provide the financial flexibility needed to integrate Parsec successfully and potentially realize synergies from the acquisition.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights on Universal Logistics Holdings. There are 6 more InvestingPro Tips available, providing a deeper understanding of the company's financial position and market performance.
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