UNIVERSAL LOGISTICS HOLDINGS, INC. (ULH)

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events, future financial performance, anticipated demand for our services, expected operating results, future capital expenditures, liquidity, financing arrangements, market conditions, business strategies and other matters that are not historical facts. In some cases, forward-looking statements can be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions.

These forward-looking statements are based on management’s current beliefs, expectations and assumptions regarding future events and are subject to risks, uncertainties and other factors, many of which are beyond our control. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include, among others, changes in freight demand, customer activity levels, automotive and industrial production, labor availability and costs, fuel prices, insurance costs, interest rates, capital expenditures, the availability of qualified owner-operators and drivers, the impact of inflationary pressures, the strength of the U.S. economy, the timing and success of cost reduction initiatives, changes in laws and regulations, cybersecurity risks, supply chain disruptions, and the other risks described in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025 and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Overview

Universal Logistics Holdings, Inc. is a holding company whose subsidiaries provide customized transportation and logistics solutions throughout the United States and in Mexico and Canada. On May 1, 2025, we completed a reincorporation from Michigan to Nevada pursuant to a statutory conversion approved by our stockholders. Through our operating subsidiaries, we provide an integrated portfolio of transportation and logistics services designed to support customers throughout their supply chains, including value-added, dedicated, intermodal and trucking services.

Our operating subsidiaries provide a comprehensive suite of transportation and logistics solutions that allow our customers to reduce costs and manage their supply chains more efficiently. We market our services through a direct sales and marketing network focused on large customers in specific industry sectors, through company-managed facilities, and through a contract network of agents who solicit freight business directly from shippers. Our business model is designed to provide flexibility in managing purchased transportation, labor and equipment costs and to allow us to respond quickly to changes in customer demand and shipping volumes.

We generate substantially all of our revenues from fees charged to customers for transportation services and customized logistics solutions. We also derive revenue from fuel surcharges, where separately identifiable, loading and unloading activities, equipment detention, container management, storage and other related services.

Operations in our intermodal and trucking segments are generally associated with individual freight shipments coordinated by our agents and company-managed terminals. In contrast, our contract logistics segment provides value-added services and dedicated transportation solutions to specific customers, generally pursuant to contracts with terms of one year or longer. As a result, our contract logistics segment generally provides greater visibility into volumes and pricing, while our intermodal and trucking segments are more directly affected by spot market conditions, customer shipping patterns and general freight demand. Our segments are also distinguished by the extent to which we dedicate personnel, equipment and other resources to support customer-specific requirements.

During the first half of 2026, we continued to operate in a challenging environment in certain parts of our business, particularly in intermodal and certain industrial and automotive end markets. Freight demand remained uneven, customer activity levels remained below historical levels in certain markets, and elevated labor, insurance, equipment, maintenance and borrowing costs continued to pressure margins.

The following discussion of our financial condition and results of operations should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 and the unaudited Consolidated Financial Statements and related notes included in this Quarterly Report on Form 10-Q.

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Current Economic Conditions

We continue to operate in an uncertain macroeconomic environment. Freight demand remains uneven across many end markets, particularly in certain industrial, automotive and consumer-related sectors. Production levels and shipping volumes in certain automotive and heavy industrial markets have remained below historical levels, which has negatively affected demand for portions of our contract logistics, intermodal and trucking services.

In addition, we continue to experience elevated costs for labor, employee benefits, insurance, equipment, maintenance, fuel and interest expense. While we seek to mitigate these pressures through pricing initiatives, productivity improvements, cost controls and customer contract renewals, there can be no assurance that such actions will fully offset increased costs or reductions in shipping volumes.

New or increased tariffs on imported goods, trade restrictions, geopolitical instability, supply chain disruptions or other macroeconomic developments could adversely affect shipping volumes, customer demand and overall freight activity. These factors could negatively affect our revenues, profitability, cash flows and financial condition.

Despite these challenges, we believe that cash generated from operations, available cash balances and borrowing capacity under our revolving credit facility and other financing arrangements will be sufficient to fund working capital needs, planned capital expenditures and debt service requirements over the next twelve months. However, our future liquidity, financial condition and results of operations will depend on a number of factors beyond our control, including freight demand, customer shipping patterns, pricing, labor availability, interest rates and broader economic conditions.

Operating Revenues

For financial reporting purposes, we group our services into five primary categories: truckload, brokerage, intermodal, dedicated, and value-added logistics services. Truckload, brokerage and intermodal services are generally associated with individual freight shipments coordinated by our agents and company-managed terminals, while dedicated and value-added services are typically provided pursuant to customer-specific arrangements, generally under contracts with terms of one year or longer.

Truckload includes dry van, flatbed, heavy-haul and refrigerated transportation. Brokerage is provided through third-party transportation providers. Intermodal includes rail-truck, steamship-truck and related drayage support services. Dedicated consists generally of short-run or round-trip transportation services provided to specific customers within defined geographic areas. Value-added services include material handling, sequencing, warehousing, returnable container management, specialty project development and other customer-specific logistics solutions.

The following table sets forth operating revenues from each of these service categories for the thirteen weeks and twenty-six weeks ended July 4, 2026 and June 28, 2025, expressed as a percentage of total operating revenues:

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Results of Operations

Thirteen Weeks Ended July 4, 2026 Compared to Thirteen Weeks Ended June 28, 2025

The following tables set forth selected items derived from our consolidated statements of income for the thirteen weeks ended July 4, 2026 and June 28, 2025, expressed as a percentage of total operating revenues. The period-to-period discussion that follows should be read together with the table and focuses on the primary drivers of changes in revenues, operating expenses and profitability.

During the second quarter of 2026, the gain on the sale of certain real property and improved segment execution favorably impacted our operating margins. The favorable impact was partially offset by a non-cash asset impairment expense and charges related to developments in outstanding legal matters during the period.

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ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read together with our Consolidated Financial Statements and related Notes included in Item 8 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed under Item 1A, “Risk Factors.”

As previously disclosed in the Company’s Current Report on Form 8-K filed on March 9, 2026 and reflected in Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2025, the Company restated its condensed consolidated financial statements for that quarter to correct an error in the goodwill impairment analysis for the intermodal reporting unit. Unless otherwise indicated, the discussion below reflects the corrected financial information.

Overview

Universal Logistics Holdings, Inc. is a holding company whose subsidiaries provide customized transportation and logistics solutions throughout the United States and in Mexico and Canada. Our operating subsidiaries provide a comprehensive suite of transportation and logistics solutions that allow our customers to reduce costs and manage their global supply chains more efficiently. We market our services through (i) a direct sales and marketing organization focused on large customers in specific industry sectors, (ii) company-managed facilities, and (iii) a contract network of agents who solicit freight business directly from shippers.

We operate, manage or provide services at 126 logistics locations in the United States, Mexico and Canada and through our network of agents and owner-operators located throughout the United States and in Ontario, Canada. Fifty of our value-added service operations are located inside customer plants or distribution operations; the remaining facilities are generally located near customer facilities to optimize the efficiency of component supply chains and production processes. Our facilities and services are often directly integrated into customers’ production processes and represent a critical part of their supply chains. To support our flexible operating model, we generally coordinate the duration of real estate leases associated with value-added programs with the term of the related customer contract, or use month-to-month leases, in order to mitigate exposure to unrecovered lease costs.

We offer a broad range of transportation services using a diverse fleet of tractors and trailing equipment provided by us, our owner-operators and third-party transportation companies. As of December 31, 2025, our owner-operators provided approximately 1,128 tractors and 471 trailers. We owned or leased approximately 3,199 tractors, 4,793 trailers, 3,570 chassis and 94 containers. Our agents and owner-operators are independent contractors who generally earn a commission calculated as a percentage of revenue or gross profit generated, and bring an entrepreneurial approach to growing and servicing customer relationships. Our transportation services are provided through a mix of union and non-union employee drivers, owner-operators, contract drivers, and third-party capacity providers.

As of December 31, 2025, we employed approximately 10,525 people in the United States, Mexico and Canada, including approximately 3,880 employees subject to collective bargaining agreements. During 2025, we also engaged contract staffing vendors to supply an average of 46 additional personnel on a full-time-equivalent basis.

Our use of agents and owner-operators supports a flexible cost structure and scalable operating model while reducing investment requirements. We believe these benefits are passed on to customers through cost savings and operating efficiency, while also supporting cash generation and returns on invested capital.

We believe our business model also provides opportunities to grow through a combination of organic initiatives and acquisitions. Organic growth opportunities include recruiting additional agents and owner-operators, expanding into new and adjacent vertical markets, and increasing penetration with key customers. We also evaluate strategic acquisitions that complement our service offerings, expand our geographic footprint, diversify our customer base, and/or add capabilities that strengthen the resilience of our network.

Segments

We report our financial results in three reportable segments: contract logistics, intermodal, and trucking. Our contract logistics segment delivers value-added and/or dedicated transportation services to support inbound logistics to industrial customers and major retailers on a contractual basis, generally under terms of one year or longer. Our intermodal segment includes local and regional drayage moves predominantly coordinated by company-managed terminals using a mix of owner-operators, company equipment and third-party capacity providers. Our trucking segment is associated with transactional freight movements coordinated by our agents and company-managed terminals using a mix of owner-operators, company equipment and broker carriers.

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Current Economic Conditions and Trends

Our results are affected by macroeconomic and industry conditions, including industrial production levels, customer inventory and production strategies, transportation capacity, and pricing dynamics across the freight market. Inflationary pressures and elevated interest rates can negatively affect operating costs and demand levels, and a recessionary environment could depress activity levels and intensify pricing competition. Labor availability and wage pressure, equipment availability, and supply chain disruptions can also affect our operating efficiency and cost structure.

In addition, we are exposed to customer and industry-specific cycles, including fluctuations in North American automotive production volumes. A significant labor disruption involving one or more customers, or a disruption in critical supplier networks, can reduce volumes and negatively affect profitability in certain contract logistics and dedicated transportation operations. We continue to monitor these conditions and adjust pricing, staffing levels, purchased transportation utilization, and capital deployment as appropriate.

A key challenge in recent periods has been weaker demand and pricing pressure in certain transactional transportation markets, including intermodal drayage, coupled with the fixed-cost intensity of certain operations. These dynamics contributed to the impairment charges recorded during the third quarter of 2025 (discussed below), and remain important factors in evaluating segment performance, capital allocation and liquidity planning.

Impairment Charges

During the third quarter of 2025, after completing our annual goodwill impairment testing earlier in the year with no impairment noted, we identified triggering events within our intermodal reporting unit. In accordance with ASC 350 and ASC 360, we evaluated certain indefinite-lived and long-lived tangible and intangible assets for impairment and determined that impairment was present. As a result, during the thirteen weeks ended September 27, 2025, we recognized impairment charges totaling $124.4 million, consisting of a $101.1 million goodwill impairment charge and $23.3 million of impairment charges related to certain customer-relationship intangible assets. The valuation of the intermodal reporting unit reflected a reduced demand forecast, lower margins due to the high fixed costs associated with that segment, and a higher discount rate reflecting company-specific risk. These charges are non-cash and did not affect covenant compliance; however, they reduced reported earnings for the period and reflect management’s updated expectations for the intermodal reporting unit. As a result of the impairment charge, no goodwill remains attributable to the intermodal reporting unit as of December 31, 2025. The Company previously reported this matter in a Current Report on Form 8-K filed on March 9, 2026 under Item 4.02(a) (Non-Reliance on Previously Issued Financial Statements), and subsequently restated its condensed consolidated financial statements for the quarter ended September 27, 2025 in Amendment No. 1 to its Quarterly Report on Form 10-Q. See Item 8, Note 1 to the Consolidated Financial Statements. The restatement related solely to the goodwill impairment analysis for the intermodal reporting unit as of September 27, 2025 and did not require restatement of previously issued financial statements for any other periods.

During the third quarter of 2024, the Company recorded aggregate impairment charges totaling $3.7 million within our former company-managed brokerage reporting segment in connection with the closure of those operations.

Factors Affecting Our Revenues

Operating Revenues. We generate substantially all of our revenues from fees charged to customers for transporting freight and providing customized logistics services. We also earn revenues from fuel surcharges (where separately identifiable), loading and unloading activities, equipment detention, container management, storage, and other accessorial services.

Transactional transportation revenues (including truckload, brokerage, and intermodal) are primarily influenced by freight volumes and shipping rates, which are affected by competition, available capacity, and overall economic conditions. Value-added and dedicated transportation revenues are driven by the level of demand for outsourced logistics services and customer production levels, and are influenced by changes in supply chain requirements, pricing trends, labor availability, and the cost environment.

Revenue Recognition. We recognize revenue when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to receive in exchange for our services. For transportation services (including truckload, brokerage, intermodal and dedicated), revenue is generally recognized over time as performance obligations are completed. For value-added services, we generally apply the “right to invoice” practical expedient because the customer simultaneously receives and consumes the benefits of the services as provided. For additional information, see Item 8, Note 3 to the Consolidated Financial Statements.

Factors Affecting Our Expenses

Purchased transportation and equipment rent. Purchased transportation and equipment rent represents amounts paid to owner-operators and other third-party capacity providers to haul freight, and the cost of short-term leased equipment used in certain services. This is generally our largest cost component and tends to vary with transactional transportation volumes and revenues.

Direct personnel and related benefits. Direct personnel and related benefits include salaries, wages and fringe benefits for employees, and contract labor costs used in selling and operating activities. These costs are influenced by staffing levels required to support contract logistics programs and transportation operations with employee drivers, as well as union wage and benefit provisions at certain facilities.

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Operating supplies and expenses. Operating supplies and expenses include fuel, tires, parts and maintenance items for company-owned and leased equipment, licenses, dock supplies, communications, utilities, operating taxes and other operating expenses. These costs generally correlate with equipment utilization and customer demand and can also be impacted by fuel price volatility and inflationary pressures.

Commission expense. Commission expense represents amounts paid to agents for generating shipments. Commissions generally fluctuate with revenue generated through our agen

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