ulh-8k_20200206.htm

 

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 6, 2020

Universal Logistics Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

Michigan

0-51142

38-3640097

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

12755 E. Nine Mile Road, Warren, Michigan

(Address of principal executive offices)

48089

(Zip Code)

(586) 920-0100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

ULH

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company        

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On February 6, 2020, the Company issued a press release announcing the Company's financial and operating results for the thirteen weeks and year ended December 31, 2019, a copy of which is furnished as Exhibit 99.1 to this Form 8-K.

Item 7.01 Regulation FD Disclosure.

On February 6, 2020, the Company issued a press release announcing that the Company’s Board of Directors declared its regular quarterly cash dividend of $0.105 per share of common stock. The dividend is payable on April 6, 2020 to shareholders of record on March 2, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

Description

 

 

99.1

Press Release dated February 6, 2020.

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

UNIVERSAL LOGISTICS HOLDINGS, INC.

 

 

 

 

 

 

Date: February 6, 2020

 

 

/s/ Steven Fitzpatrick

 

 

 

 

Steven Fitzpatrick

 

 

 

 

Secretary

 

 

ulh-ex991_6.htm

Exhibit 99.1

 

Universal Logistics Holdings Reports Fourth Quarter 2019 Financial Results; Declares Dividend; Provides 2020 Outlook

 

-

Fourth Quarter 2019 Operating Revenues:  $375.9 million, 2.7% decrease

 

-

Fourth Quarter 2019 Operating Income:  $15.5 million; includes $2.9 million legal charge

 

-

Fourth Quarter 2019 EPS:  $0.32; includes $0.08 legal charge

 

-

Regular Quarterly Dividend: $0.105 per share

Warren, MI – February 6, 2020 — Universal Logistics Holdings, Inc. (NASDAQ: ULH), a leading asset-light provider of customized transportation and logistics solutions, today reported consolidated fourth quarter 2019 net income of $8.7 million, or $0.32 per basic and diluted share, on total operating revenues of $375.9 million.  This compares to net income of $9.0 million, or $0.32 per basic and diluted share, during fourth quarter 2018 on total operating revenues of $386.4 million.  Included in fourth quarter 2019 operating income was a pre-tax charge of $2.9 million, or $0.08 per share, for a previously disclosed legal matter.  Fourth quarter 2019 results also include $0.5 million of pre-tax holding gains, or $0.01 per share, on marketable securities due to changes in fair value recognized in income compared to $1.6 million of pre-tax holding losses, or $0.04 per share, in the fourth quarter of 2018.

In the fourth quarter 2019, Universal reported operating income of $15.5 million compared to operating income of $17.9 million in the same period last year.  EBITDA, a non-GAAP measure, increased $6.3 million during the fourth quarter 2019 to $37.7 million, compared to $31.4 million in the same period one year earlier.  Both Universal’s reported operating income and EBITDA during the fourth quarter 2019 include a litigation settlement charge of $2.9 million.  As a percentage of operating revenue, Universal’s operating income margin and EBITDA margin as reported were 4.1% and 10.0%, respectively.  These metrics compare to 4.6% and 8.1%, respectively, in the fourth quarter of 2018. Operating income margin and EBITDA margin for the fourth quarter 2019 were both reduced 0.8% as a result of the impact of the litigation charge.  

Operating revenues from truckload services decreased $15.3 million, or 20.8%, to $58.4 million, compared to $73.8 million for the same period last year. Included in truckload revenues for the recently completed quarter were $6.1 million in separately identified fuel surcharges compared to $8.1 million during the same period last year.  The decrease in truckload services reflects an 18.0% decrease in the number of loads hauled and a 2.3% decrease in average operating revenue per load, excluding fuel surcharges.  During the fourth quarter 2019, Universal moved 54,804 loads compared to 66,821 during the same period last year.  

Revenues for the fourth quarter 2019 from brokerage services decreased $12.9 million, or 13.1%, to $85.3 million compared to $98.1 million one year earlier. Included in the decline was a $6.1 million decrease in brokerage revenues from our freight forwarding division when compared to the same period last year.  The remaining decrease is primarily due to a 12.2% decrease in the average operating revenue per load, which was partially offset by a 4.4% increase in the number of brokered loads moved.  During the fourth quarter of 2019, Universal brokered 55,812 loads, compared to 53,467 loads during the same period last year, while the average operating revenue per load fell from $1,710 per load in the fourth quarter 2018 to $1,501 during the same period this year.  


Intermodal services revenues increased $28.4 million to $112.3 million in the fourth quarter 2019, up from $83.9 million during the same period last year.  Included in intermodal revenues were $33.7 million of incremental revenue from acquired companies.  During the fourth quarter 2019 intermodal fuel surcharges totaled $13.5 million, compared to $11.1 million during the same period last year.  Intermodal services experienced increases in both the average operating revenue per load, excluding fuel surcharges, and in the number of loads hauled.  During the fourth quarter 2019, Universal moved 186,646 intermodal loads, compared to 143,845 loads during the same period last year, while also increasing its average operating revenue per load, excluding fuel surcharges, by 3.9%.

Fourth quarter 2019 operating revenues from dedicated services decreased 11.7% to $33.0 million compared to $37.4 million one year earlier. Dedicated services revenues included $3.5 million in separately identified fuel surcharges in the fourth quarter 2019 compared to $4.7 million during the same period last year.  The decrease in operating revenues was primarily attributable to the impact the labor strike had on shuttle operations supporting General Motors during the fourth quarter 2019.  

Revenues from value-added services decreased $6.2 million during the fourth quarter 2019 to $86.9 million.  This compares to $93.2 million from value-added services one year earlier.  The overall decline in value-added revenues was primarily attributable to the loss of production at value-added operations supporting passenger vehicles during the United Auto Workers labor strike, as well as a $2.3 million decline in value-added operations supporting heavy-truck production.  

During the fourth quarter 2019, the transportation segment, which is primarily comprised of truckload, brokerage and intermodal services operations, reported operating income of $11.6 million on total operating revenues of $260.9 million.  A weak truckload freight environment, which persisted throughout the fourth quarter of 2019, led to the general decline in operating income in the transportation segment.  In the logistics segment, which includes value-added and dedicated services, fourth quarter 2019 income from operations was $6.7 million on total operating revenues of $114.8 million.  The results of the logistics segment were negatively impacted by the UAW labor strike that lasted into the fourth quarter 2019.  

“Thank you to the over 12,000 hardworking professionals, each of whom contributed to the success of Universal in 2019,” stated Tim Phillips, Universal’s newly appointed Chief Executive Officer. “This past year wasn’t without its challenges,” continued Mr. Phillips. “We faced a soft freight environment, prolonged strike at a major customer and resolved a couple legacy legal matters.  With much of these headwinds behind us, I firmly believe Universal is well positioned for even greater success in the future.  We have strong leadership in place, a deep pool of talent to support them, and a clearly defined strategy upon which to execute.  As we close the books on 2019, it is with great optimism that I look forward to the numerous opportunities that lie ahead for Universal.”

 

Universal also announced its full-year performance expectations for 2020. Based on currently available information, Universal expects to report 2020 total operating revenues in the range of $1.6 billion to $1.7 billion, and operating margins in the 7% to 9% range.  Capital expenditures are expected to be in the range of $70 million to $80 million, and total interest expense for the year is expected to be between $16 million to $18 million.

As of December 31, 2019, Universal held cash and cash equivalents totaling $7.7 million, and $9.4 million in marketable securities.  Outstanding debt at the end of the fourth quarter 2019 was $459.7 million and capital expenditures during the quarter totaled $19.0 million.

Universal Logistics Holdings, Inc. also announced today that its Board of Directors has declared the regular quarterly cash dividend of $0.105 per share of common stock.  The dividend is payable to shareholders of record at the close of business on March 2, 2020 and is expected to be paid on April 6, 2020.

Universal calculates and reports selected financial metrics for purposes of our lending arrangements, and in an effort to isolate and exclude the impact of non-operating expenses related to our corporate development activities. These statistics are described in more detail below in the section captioned “Non-GAAP Financial Measures.”


Conference call:

We invite investors and analysts to our quarterly earnings conference call.  

 

Quarterly Earnings Conference Call Dial-in Details:

 

Time:  10:00 a.m. Eastern Time

Date:  Friday, February 7, 2020

Call Toll Free:  (866) 622-0924

International Dial-in:  +1 (660) 422-4956

Conference ID:  9586267

 

A replay of the conference call will be available beginning two hours after the call through March 6, 2020, by calling (855) 859-2056 (toll free) or +1 (404) 537-3406 (toll) and using conference ID 9586267. The call will also be available on investors.universallogistics.com.  

 

Source: Universal Logistics Holdings, Inc.

 

For Further Information:

Steven Fitzpatrick, Investor Relations

SFitzpatrick@UniversalLogistics.com

About Universal:

Universal Logistics Holdings, Inc. is a leading asset-light provider of customized transportation and logistics solutions throughout the United States, and in Mexico, Canada and Colombia.  We provide our customers with supply chain solutions that can be scaled to meet their changing demands and volumes.  We offer our customers a broad array of services across their entire supply chain, including truckload, brokerage, intermodal, dedicated, and value-added services. 

Forward Looking Statements

Some of the statements contained in this press release might be considered forward-looking statements. These statements identify prospective information. Forward-looking statements can be identified by words such as: “expect,” “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “future,” “likely,” “may,” “should” and similar references to future periods. Forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. These forward-looking statements are subject to a number of factors that may cause actual results to differ materially from the expectations described. Additional information about the factors that may adversely affect these forward-looking statements is contained in the Company’s reports and filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws.


UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)

 

 

Thirteen Weeks Ended

December 31,

 

 

Year Ended

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Truckload services

 

$

58,441

 

 

$

73,758

 

 

$

251,574

 

 

$

313,811

 

Brokerage services

 

 

85,260

 

 

 

98,133

 

 

 

354,940

 

 

 

367,579

 

Intermodal services

 

 

112,256

 

 

 

83,884

 

 

 

390,299

 

 

 

251,074

 

Dedicated services

 

 

33,046

 

 

 

37,433

 

 

 

138,664

 

 

 

144,348

 

Value-added services

 

 

86,928

 

 

 

93,170

 

 

 

376,521

 

 

 

384,896

 

Total operating revenues

 

 

375,931

 

 

 

386,378

 

 

 

1,511,998

 

 

 

1,461,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation and equipment rent

 

 

183,495

 

 

 

189,517

 

 

 

723,079

 

 

 

716,019

 

Direct personnel and related benefits

 

 

89,480

 

 

 

94,106

 

 

 

368,243

 

 

 

354,654

 

Operating supplies and expenses

 

 

28,796

 

 

 

32,189

 

 

 

120,767

 

 

 

122,736

 

Commission expense

 

 

7,519

 

 

 

9,083

 

 

 

31,204

 

 

 

37,381

 

Occupancy expense

 

 

9,122

 

 

 

8,127

 

 

 

36,645

 

 

 

30,701

 

General and administrative

 

 

14,187

 

 

 

8,169

 

 

 

44,497

 

 

 

31,523

 

Insurance and claims

 

 

6,203

 

 

 

12,302

 

 

 

47,418

 

 

 

30,475

 

Depreciation and amortization

 

 

21,626

 

 

 

14,977

 

 

 

74,765

 

 

 

54,425

 

Total operating expenses

 

 

360,428

 

 

 

368,470

 

 

 

1,446,618

 

 

 

1,377,914

 

Income from operations

 

 

15,503

 

 

 

17,908

 

 

 

65,380

 

 

 

83,794

 

Interest expense, net

 

 

(4,466

)

 

 

(4,783

)

 

 

(17,012

)

 

 

(14,593

)

Other non-operating income (expense)

 

 

606

 

 

 

(1,500

)

 

 

1,818

 

 

 

188

 

Income before income taxes

 

 

11,643

 

 

 

11,625

 

 

 

50,186

 

 

 

69,389

 

Provision for income taxes

 

 

2,906

 

 

 

2,605

 

 

 

12,600

 

 

 

17,211

 

Net income

 

$

8,737

 

 

$

9,020

 

 

$

37,586

 

 

$

52,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

 

$

0.32

 

 

$

1.34

 

 

$

1.84

 

Diluted

 

$

0.32

 

 

$

0.32

 

 

$

1.34

 

 

$

1.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

27,282

 

 

 

28,373

 

 

 

28,069

 

 

 

28,384

 

Diluted

 

 

27,283

 

 

 

28,376

 

 

 

28,070

 

 

 

28,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share:

 

$

0.105

 

 

$

0.215

 

 

$

0.420

 

 

$

0.530

 

 


UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 

  

 

December 31,

2019

 

 

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,726

 

 

$

5,727

 

Marketable securities

 

 

9,369

 

 

 

9,333

 

Accounts receivable - net

 

 

210,534

 

 

 

215,991

 

Other current assets

 

 

44,214

 

 

 

44,207

 

Total current assets

 

 

271,843

 

 

 

275,258

 

Property and equipment - net

 

 

339,823

 

 

 

303,234

 

Other long-term assets - net

 

 

358,869

 

 

 

264,655

 

Total assets

 

$

970,535

 

 

$

843,147

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities, excluding current maturities of debt

 

$

191,353

 

 

$

169,266

 

Debt - net

 

 

457,612

 

 

 

400,452

 

Other long-term liabilities

 

 

116,353

 

 

 

64,130

 

Total liabilities

 

 

765,318

 

 

 

633,848

 

Total shareholders' equity

 

 

205,217

 

 

 

209,299

 

Total liabilities and shareholders' equity

 

$

970,535

 

 

$

843,147

 

 


UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Summary of Operating Data

 

 

Thirteen Weeks Ended

December 31,

 

 

Year Ended

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Truckload Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of loads

 

 

54,804

 

 

 

66,821

 

 

 

233,829

 

 

 

287,782

 

Average operating revenue per load, excluding fuel surcharges

 

$

990

 

 

$

1,014

 

 

$

965

 

 

$

975

 

Average operating revenue per mile, excluding fuel surcharges

 

$

3.18

 

 

$

3.07

 

 

$

3.27

 

 

$

2.89

 

Average length of haul

 

 

311

 

 

 

330

 

 

 

295

 

 

 

337

 

Average number of tractors

 

 

1,472

 

 

 

1,711

 

 

 

1,524

 

 

 

1,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of loads (a)

 

 

55,812

 

 

 

53,467

 

 

 

228,203

 

 

 

210,713

 

Average operating revenue per load (a)

 

$

1,501

 

 

$

1,710

 

 

$

1,499

 

 

$

1,665

 

Average length of haul (a)

 

 

669

 

 

 

622

 

 

 

653

 

 

 

598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intermodal Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of loads

 

 

186,646

 

 

 

143,845

 

 

 

671,184

 

 

 

455,752

 

Average operating revenue per load, excluding fuel surcharges

 

$

534

 

 

$

514

 

 

$

507

 

 

$

482

 

Average number of tractors

 

 

2,294

 

 

 

1,523

 

 

 

1,916

 

 

 

1,175

 

Number of depots

 

 

15

 

 

 

14

 

 

 

15

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dedicated Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of loads (b)

 

 

119,745

 

 

 

152,324

 

 

 

553,682

 

 

 

567,549

 

 

(a)

Excludes operating data from freight forwarding division in order to improve the relevance of the statistical data related to our brokerage services and improve the comparability to our peer companies.

(b)

Includes shuttle moves.


UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Summary of Operating Data - Continued

(Dollars in thousands)

 

 

Thirteen Weeks Ended

December 31,

 

 

Year Ended

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Value-added Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of direct employees

 

 

3,702

 

 

 

3,757

 

 

 

3,636

 

 

 

3,841

 

Average number of full-time equivalents

 

 

1,177

 

 

 

1,463

 

 

 

1,487

 

 

 

1,405

 

Number of active programs

 

 

55

 

 

 

50

 

 

 

55

 

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues by Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

260,938

 

 

$

260,448

 

 

$

1,013,548

 

 

$

949,242

 

Logistics

 

 

114,774

 

 

 

125,487

 

 

 

497,315

 

 

 

510,918

 

Other

 

 

219

 

 

 

443

 

 

 

1,135

 

 

 

1,548

 

Total

 

$

375,931

 

 

$

386,378

 

 

$

1,511,998

 

 

$

1,461,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations by Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

11,625

 

 

$

19,361

 

 

$

20,226

 

 

$

51,634

 

Logistics

 

 

6,738

 

 

 

(1,814

)

 

 

47,694

 

 

 

31,136

 

Other

 

 

(2,860

)

 

 

361

 

 

 

(2,540

)

 

 

1,024

 

Total

 

$

15,503

 

 

$

17,908

 

 

$

65,380

 

 

$

83,794

 

 

 



Non-GAAP Financial Measures

In addition to providing consolidated financial statements based on generally accepted accounting principles in the United States of America (GAAP), we are providing additional financial measures that are not required by or prepared in accordance with GAAP (non-GAAP). We present EBITDA and EBITDA margin, each a non-GAAP measure, as supplemental measures of our performance. We define EBITDA as net income plus (i) interest expense, net, (ii) income taxes, (iii) depreciation, and (iv) amortization. We define EBITDA margin as EBITDA as a percentage of total operating revenues. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis.

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, we are presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial measure to the comparable GAAP measure. Set forth below is a reconciliation of net income, the most comparable GAAP measure, to EBITDA for each of the periods indicated:

 

Thirteen Weeks Ended

December 31,

 

 

Year Ended

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

( in thousands)

 

 

( in thousands)

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,737

 

 

$

9,020

 

 

$

37,586

 

 

$

52,178

 

Provision for income taxes

 

 

2,906

 

 

 

2,605

 

 

 

12,600

 

 

 

17,211

 

Interest expense, net

 

 

4,466

 

 

 

4,783

 

 

 

17,012

 

 

 

14,593

 

Depreciation

 

 

18,315

 

 

 

12,461

 

 

 

59,023

 

 

 

48,679

 

Amortization

 

 

3,311

 

 

 

2,516

 

 

 

15,742

 

 

 

5,746

 

EBITDA

 

$

37,735

 

 

$

31,385

 

 

$

141,963

 

 

$

138,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin (a)

 

 

10.0

%

 

 

8.1

%

 

 

9.4

%

 

 

9.5

%

 

(a)

EBITDA margin is computed by dividing EBITDA by total operating revenues for each of the periods indicated.

We present EBITDA and EBITDA margin because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

EBITDA has limitations as an analytical tool. Some of these limitations are:

EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and

Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA and EBITDA margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and only supplementally on EBITDA and EBITDA margin.