Universal Logistics Holdings reported a sharp increase in second-quarter GAAP earnings, but the company’s underlying results weakened as lower intermodal activity, softer consolidated revenue and rising operating costs offset improvement in its largest business segment.

The Warren, Michigan-based transportation and logistics company recorded net income of $26.2 million for the 13 weeks ended July 4, compared with $8.3 million in the corresponding 2025 period. Basic and diluted earnings increased to $0.99 per share from $0.32 per share.

The reported increase was driven principally by a $45.3 million gain from the sale of certain real estate in Kearny, New Jersey. Universal also recognized $12.3 million of charges related to developments in outstanding legal matters and a $3.9 million non-cash impairment charge on tractors that the company no longer expects to use in its operations. Together, those three items increased reported operating income by a net $29.1 million.

Once those items were excluded, the earnings comparison moved in the opposite direction. Adjusted net income fell to $4.1 million from $8.3 million, while adjusted diluted earnings per share declined to $0.16 from $0.32. Adjusted income from operations was $16.0 million, down 19.6% from $19.9 million a year earlier.

The difference between the GAAP and adjusted figures is central to assessing the quarter. Universal’s reported operating margin expanded to 11.9% from 5.1%, reflecting the real-estate gain. On an adjusted basis, however, operating margin narrowed to 4.2% from 5.1%, indicating that the company generated less operating profit from each dollar of revenue after unusual items were removed.

Adjusted earnings before interest, taxes, depreciation and amortization also declined. Adjusted EBITDA totaled $49.2 million, compared with $56.2 million in the prior-year quarter, while the adjusted EBITDA margin fell to 13.0% from 14.3%.

Consolidated operating revenue decreased 3.7% to $379.3 million from $393.8 million. Growth in contract logistics was insufficient to offset a steep contraction in intermodal revenue and a small decline in trucking revenue.

Contract logistics remained Universal’s largest and strongest segment. Revenue increased 4.2% to $271.4 million from $260.6 million, supported by the company’s value-added and dedicated transportation activities. Separately identified fuel surcharges in dedicated transportation increased to $10.5 million from $7.3 million.

Operating income in contract logistics rose 13.0% to $24.6 million from $21.8 million. The segment’s operating margin improved to 9.1% from 8.4%, showing that revenue growth translated into stronger profitability despite continued uncertainty across transportation markets.

The segment nevertheless ended the quarter with 79 active value-added programs, down from 87 a year earlier. The average number of direct employees associated with value-added operations also declined to 6,792 from 7,407. The figures suggest Universal is generating more revenue and operating profit from a smaller program base, although fewer programs could limit growth unless new business is added.

Intermodal operations were the primary source of weakness. Segment revenue fell 36.0% to $44.1 million from $68.9 million as both load volumes and revenue per load declined. Intermodal loads dropped 34.0% to 62,291, while average operating revenue per load, excluding fuel surcharges, decreased 6.3% to $521.

Accessorial revenue from detention, demurrage, storage and related charges fell to $5.2 million from $9.2 million. Fuel surcharges declined to $7.1 million from $8.2 million. Those decreases compounded the effect of fewer loads and weaker underlying pricing.

The intermodal segment posted an operating loss of $10.4 million, nearly double the $5.7 million loss recorded one year earlier. Its operating margin deteriorated to negative 23.7% from negative 8.2%. Universal also operated an average of 1,017 intermodal tractors during the quarter, down from 1,392 a year earlier, reflecting the lower level of activity and the company’s effort to align capacity with demand.

Chief Executive Officer Tim Phillips said the company had made progress within intermodal and was positioning the business to benefit from a continued freight-market recovery. He also cautioned that the recovery remained at an early stage and that market conditions continued to evolve.

The segment data indicate that any recovery had not yet produced year-over-year financial improvement by the end of the quarter. For intermodal profitability to recover materially, Universal will likely require some combination of higher freight volumes, firmer pricing, improved equipment utilization and lower fixed costs per load.

Trucking delivered a more stable revenue result but also showed pressure beneath the headline number. Segment revenue edged down to $63.8 million from $64.1 million. Brokerage revenue increased slightly to $18.8 million from $18.4 million, while separately identified fuel surcharges rose to $5.6 million from $3.4 million.

Trucking load volumes fell 15.7%, but average operating revenue per load, excluding fuel surcharges, increased 15.5% to $2,226. The increase in revenue per load largely offset the volume decline at the revenue level, although it was not sufficient to preserve operating profit.

Trucking operating income fell to $2.9 million from $3.3 million, and the segment’s operating margin narrowed to 4.5% from 5.2%. The average tractor count decreased to 520 from 602, while average length of haul increased to 402 miles from 369 miles.

At the consolidated level, several expense categories moved higher despite the revenue decline. Insurance and claims expense rose to $17.5 million from $7.6 million. Occupancy expense increased to $16.3 million from $11.8 million, and general and administrative expense advanced to $16.0 million from $14.0 million.

Operating supplies and expenses increased to $56.3 million from $50.4 million. Those increases outweighed reductions in purchased transportation and equipment rent, which fell to $67.0 million from $81.5 million, and direct personnel costs, which declined to $164.8 million from $168.0 million.

Higher interest expense created an additional constraint. Net interest expense increased to $10.6 million from $8.9 million during the quarter. For the first 26 weeks of 2026, net interest expense was $20.3 million, compared with $17.1 million in the first half of 2025.

The half-year figures reinforce the weakness in adjusted performance. Revenue for the first 26 weeks decreased to $746.9 million from $776.2 million. Adjusted income from operations fell to $20.8 million from $35.6 million, reducing the adjusted operating margin to 2.8% from 4.6%.

First-half adjusted net income was only $608,000, or $0.02 per diluted share, compared with $14.3 million, or $0.54 per share, a year earlier. Adjusted EBITDA declined to $89.9 million from $108.0 million, and adjusted EBITDA margin contracted to 12.0% from 13.9%.

Contract logistics revenue for the first half increased 4.7% to $541.0 million, but segment operating income decreased to $42.1 million from $45.6 million. Intermodal revenue fell to $91.9 million from $139.6 million, and the segment’s operating loss widened to $23.6 million from $16.4 million. Trucking revenue declined to $114.0 million from $119.7 million, while operating income fell to $3.4 million from $5.5 million.

Universal’s balance-sheet update provided a more favorable signal. Outstanding borrowings totaled $695.5 million at the end of the quarter, down $59.2 million during the three-month period and $106.8 million since the end of 2025. The company had $20.3 million of cash and cash equivalents.

Universal also reported approximately $238.8 million of availability under its $500 million revolving credit facility and said it remained in compliance with its financial covenants. The reduction in borrowings may help moderate future interest costs, although debt remains substantial relative to the company’s cash balance and current adjusted earnings.

Capital expenditures totaled $67.7 million during the quarter, including a $55.0 million non-cash expenditure connected with a previously disclosed property exchange. The distinction is important because the reported capital-expenditure total does not represent an equivalent cash outflow during the period.

The board maintained Universal’s quarterly cash dividend at $0.105 per common share. The dividend is payable on October 1 to shareholders of record at the close of business on September 1. Dividends declared during the first half totaled $0.21 per share, unchanged from the corresponding 2025 period.

The company did not provide a quantified full-year revenue or earnings forecast in its results release. Management instead emphasized execution, investment in operations and its expectation that the freight cycle is beginning to move in a more favorable direction.

That outlook remains dependent on the timing and breadth of a freight recovery. Contract logistics is currently providing stability and improved quarterly margins, but intermodal losses are absorbing a meaningful portion of that profit. Trucking is producing positive earnings, although lower volumes and narrower margins indicate that conditions remain competitive.

Universal’s second-quarter GAAP result therefore presents a stronger earnings headline than its recurring operations generated. The Kearny property sale increased reported profit, helped support debt reduction and highlighted the value of the company’s real-estate holdings, but it does not resolve the operating challenges visible in adjusted earnings.

Future quarters will be judged less by asset-sale gains and more by whether intermodal losses narrow, adjusted margins recover and contract logistics can sustain growth. Continued debt reduction would strengthen the financial position, but a durable improvement in shareholder earnings will require operating profit to rise without relying on property transactions or other non-recurring items.