Universal Truckload to acquire LINC for $335M, posts higher 2Q profit

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Universal Truckload Services on Thursday, July 26, announced that it will acquire LINC Logistics Co. in a stock-for-stock transaction valued at about $335 million, including the assumption of debt. Universal also announced financial results for the 13 weeks and 26 weeks ended June 30.

LINC, an asset-light provider of custom-developed third-party logistics solutions, primarily provides value-added logistics services to the automotive and manufacturing industries, but also provides dedicated truckload, expedited and freight forwarding services to customers throughout North America. LINC manages or provides its services at 43 locations throughout the United States, Mexico and Canada.

“The combination of Universal and LINC will create one of the largest full-service asset-light logistics platforms in North America and significantly enhances our long-term growth profile,” said Don Cochran, president and chief executive officer of Warren, Mich.-based Universal. “We expect that the addition of LINC’s strong business relationships, contractually-based revenue streams and significant margins will enable us to sell a more comprehensive suite of services to our customers, diversify our business mix and drive earnings-per-share growth. We are very excited about the opportunities this transaction will provide Universal going forward.”

The transaction brings together two companies controlled by trucking magnate Manuel Moroun. The Moroun family, also the owner of the Ambassador Bridge in Detroit, will continue to hold a controlling interest in the combined company but may liquidate some interests. “Although we as a family currently expect to remain controlling shareholders of Universal, we understand that some of our institutional shareholders would prefer additional liquidity,” said Manuel’s son, Matthew Moroun.

In the 12 months ended March 31, LINC generated $301 million of revenue and $49 million of adjusted EBITDA. “We believe that the additional resources we will gain through this combination will enable us to achieve our collective growth goals more expeditiously,” said H.E. Wolfe, LINC president and CEO. “We will continue to provide industry-leading service to all of our customers and are excited about the new opportunities that the additional resources of Universal will enable us to provide.”

Until the transaction closes, the management structure of Universal and LINC will remain the same. Following the closing, Wolfe is expected to assume the role of CEO of the combined company, and Cochran is expected to remain president of Universal, and is expected to also become vice chairman of the company.

For the 13 weeks ended June 30, Universal’s operating revenues increased 2.8 percent, or $5.1 million, to $185.1 million from $180.0 million for the 13 weeks ended July 2, 2011, and the company’s operating ratio improved 70 basis points to 95.9 percent from 96.6 percent. Income from operations increased by 22.9 percent, or $1.4 million, to $7.5 million from $6.1 million, and net income increased by $1.1 million to $5.0 million from $3.9 million.

For the 26 weeks ended June 30, operating revenues increased 6.9 percent, or $23.3 million, to $360.9 million from $337.6 million for the 26 weeks ended July 2, 2011, and the company’s operating ratio improved 70 basis points to 96.4 percent from 97.1 percent. Income from operations increased by 29.7 percent, or $2.9 million, to $12.9 million from $9.9 million, and net income increased by $1.8 million, to $8.6 million from $6.8 million.

“The second quarter of 2012 proved to be another good quarter for Universal,” Cochran said. “Our revenue growth in the second quarter of 2012 was driven by an increase in the number of loads hauled and our average revenue per loaded mile for our brokerage and intermodal operations compared to the second quarter of 2011. We remain cautiously optimistic about the second half of 2012 and believe we will see an uptick in revenue for the third quarter based on the seasonality of the freight we haul, and will continue to look for ways to improve our profitability in a challenging market.”