Hello. And welcome to the Universal Logistics Holdings’ First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

During the course of this call, management may make forward-looking statements based on their best view of the business as seen today.

Statements that are forward-looking related to Universal’s business objectives or expectations and can be identified by the use of the words such as "belief," "expect," "anticipate" and "project." Such statements are subject to risks and uncertainties and actual results could differ materially from those expectations.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Tim Phillips, Chief Executive Officer; Mr. Jude Beres, Chief Financial Officer; and Mr. Steve Fitzpatrick, Vice President of Finance and Investor Relations. Thank you. Mr. Phillips, you may begin..

Thank you. Good morning. Thank you for joining Universal Logistics Holdings first quarter 2020 earnings call. We started this year under a drastically different operating environment incurred how we exited the first quarter. We created a plan to accept the high expectations for the year, if you can event online plans off and need adjustment.

We were looking to employees and associates, we founded an amazing pass into the condition in challenge of the message its COVID-19 pandemic. Over the last six weeks, I put them to true resilience of our associates as the company adjust to quote and it drastically changed operating environment.

First off, I'd like to recognize the sacrifices of our drivers and contractors who answer the call and kept the phase as critical moving in an extremely tough environment. Our warehouse worker and dock personnel have remained committed to the cause and right there on the front line supporting the flow and find so good.

Behind the scenes, our office personnel continued to perform at a high level delivering solution to our value-added customers in supporting our associates on the front line. I'm extremely proud of the entire Universal team.

Before moving into the details of the quarter, I want to first make a mention provide an overview on where we are in length our ability to respond to the COVID-19 outbreak.

With operation located in the United States, Mexico, Canada and Columbia, we realize early on and that one of the key demanding to this crisis would be tied communication with our employee, contractor, customers, and vendors.

I'm in constant communication with our senior leadership to evaluate welfare, safety, volume trends and customer needs to quickly react with the changing landscape.

We provide a real-time update by some people of the latest guidelines of the Center of Disease Control, World Health Organization, state government as well as providing targeted local information to ensure our people are up-to-date find the latest information and best practices to keep them safe not only at work but in the local communities.

We continue to follow best practices for social distancing, personal protection, clean prime procedures and how workforce progresses. The overall environment began to change rapidly at the end of the first quarter. The biggest shock to the system came from 8th March with North American auto and truck production work that's been.

Representing over 25% of our implied revenues, leadership reacted quickly to balance the workforce with the buying. In addition to the pensions of the auto and truck production, there is state local government began issuing expanded shelter and place order that limited continue operations with a set of businesses.

We began to fill up in the event depending a larger impact on the business volumes. We made the decision in late March further approximately 70% of the direct quarter fall and 30% on administrative personnel process served by. These are really typical positions but necessary to preserve integrity of the business model.

Accelerate our cost containment and reduction strategy, we evaluated our list of essential operating expenses adjusted our capital expenditure deployment while taking all necessary steps to preserve liquidity. We are actively managing the situation and will continue to raise back the business for ensured success when we are like return to normal.

I would like to now provide some highlights from the first quarter. Yesterday afternoon, Universal released its first quarter financial results reporting $382.2 million topline revenues. A new record high to the first quarter operating revenues.

And turning to $0.45 per share which included $0.09 per share charge for noncash holding losses on a remarkable securities portfolio.

Even the rapidly maturing business climate we experienced late at March, I'm pleased with the results of the quarter and feel proud of the way Universal team jumped into action to cap all event as the coronavirus pandemic unfolded.

While the auto and truck production shutdown, a souring effect on end of the month definitely others stood aside when in the headwind as well. Chinese New Year came early in 2020 with factories allowing and the change of work.

Which is normally is standing at 14 weeks at our own instigate and in second half just last as longer due to coronavirus outbreak. Turning to imports, never rebounded in the first quarter as demand in the U.S. also contracted because of the virus.

Although time was down 40% in our Southern California operation, we also continued to experience some rate fractures on the truck work that year for much of the first quarter.

Excluding the effects of the auto and the truck shutdown and the inclusive of COVID-19 operate, normalized first quarter results would have been Universals highest revenue for any quarter on record.

Our estimate, in our estimates COVID related revenue losses in Southern California operations amounts to $8.2 million on topline revenue and lower our operating income by $2.7 million. The impact of topline revenues from auto and truck manufacturing shutdown was $8.3 million and to reduce that operating income by $2.6 million.

We believe the cumulative effect on these did acquire better EPS by $0.15 per share. Now, for some color on each service driver. Truckload finished the quarter with $58.9 million in topline revenue which was an increase of 10.3% compared to 2019. The decrease was primarily driven by a 7.2% decline to load compared with the same period of 2019.

Open GAAP to the metric accounted for roughly 2/3rd of the truckload which was new. And the quarter progresses by a sharp now drop off over to get moving but could relate in fueling that. On local and regional operating networks both inside food, beverage and consumer goods to mitigate the decline.

Brokerage services was a tail to vastly different operating environment entering and exiting in the quarter. Although revenue was flat $85.9 million, low tail was up 13.9%. The number show a very aggressive rate driven environment coupled with very small growth margins at the beginning of the quarter.

Our company broker shop ratings are heavily involved in food and beverage and it experienced a drastic change in the last few weeks of March.

Stock based food, of consumer stock to the outline food and beverages becomes a pandemic and towards the end of this quarter we saw an increase in our gross margin as industry began to experience loosening the truckload capacity along our brokerage for this year and lower transportation rate.

Intermodal services revenue increased $19.2 million or 21% to a $110.3 million. Load count was on 19.7% and revenue for load was relatively consistent. Legacy year homes are now performed well other condition with the biggest boon attributed to acquisitions made in 2019.

Offsetting similar class of momentum with a drag from our Southern California operation. In this market, we experienced a significant drop in load count with our custom in heavily weighted in towards resale.

We are very pleased with our acquisition integration in the intermodal rate sector, we are looking forward to completing integrations with the most recent acquisition rose from intermodal services by the end of the second quarter this year.

I'm extremely happy with the intermodal team's team combining with various entity, employee, contractors and drivers. We are extremely fast time with the counts and employees and restructure again realized throughout with acquisition. Our dedicated services revenue was down 14.7% and $31.6 million.

Load count was up slightly for the quarter $139,000 load due to additional shop owners compared to the same quarter of 2019. In closing, our North American auto similarly planned a severe effect on revenue in the last few weeks in March.

By comparison, our dedicated fleet handled 21.1% more moves during January and February at 2020 compared to the same period in 2019. But due to the ongoing shutdown end of the quarter up only 3.8%. Value added services revenue increased $2.2 million to $95.5 million. Auto and truck plant shut down at a negative effect on our revenue in late march.

Our value added group was running on all cylinders before plants began to shut down at the end of the first quarter and we've launched tracks with on track with having a record quarter. Universals worked hard in certified service line and auto is still the large piece is 29% followed by retail and consumer grid in 22%.

Industrial booking heavy trucks next to 12% and aerospace a comprising about 2%. Universal continues to support a robust pipeline and well from a second and first quarter winter just expecting it.

While the effect of COVID-19 is expected to have some impact on the time we got in implementing of those when we are confident that we'll realize the effect of those customer partnership in the second half of 2020 and in 2021.

To add a little color, our value added services group grew $60 million and went to thus part this year, our dedicated transportation group in other $40 million endpoints this year. We are also very optimistic about our 85 by and the fact that we got a 23 new agent in the first 13 weeks to 2020.

Our combined pipeline still stand to $500 million opportunity, times seem challenging now, we were excited about the future, what the future will bring and remains very bullish in the long-term outlook of our business.

To provide the insight on what we are seeing for April, we have revenues of the month went down approximately 30% compared to last April. To respond with these declines we've undertook a thorough review of our operating expense and then continued to adjust proportionately.

We also evaluated our capital expenditures and we are able to make a number of purchases either to later this year or next. We will also realize a cost savings for completing the integration of our Fore side acquisition by the end of the second quarter.

Understanding that one of our large response is direct personnel related benefit to continue look for way to identify cost pay. And we're doing that across the board including executive management team, we are having both take a month pay time off each month throughout the second quarter.

Before turning it over to Jude, I wanted to reiterate my appreciation and gratitude to the entire Universal family. Whether dedication to operating safely, effect and effectively through a variety of stage shutdown and local government and restrictions across the United States.

Jude?.

Thanks, Tim. Good morning, everyone. Universal Logistics Holdings reported consolidated net income of $12.2 million or $0.45 per share and total operating revenues of $382.2 million in the first quarter of 2020. This compares the net income of $17.3 million or $0.61 per share on total operating revenues up $377.4 million in the first quarter of 2019.

Consolidated income from operations decreased $2.6 million to $23.9 million compared to operating income of $26.5 million in the first quarter of 2019. EBITDA decreased $4.6 million, was a $39.8 million in the first quarter of 2020 which compares to $44.4 million one year earlier.

Our operating margin and EBITDA margin for the first quarter of 2020 are 6.3% and 10.4% of total operating revenues. These metrics compared to 7% and a 11.8% respectively in the first quarter of 2019.

Universal's financial results were negatively impacted by a 40% reduction in Intermodal loads in Southern California, a loss of automotive production during the last two weeks of the quarter and finally pre-taxes losses related to the mark-to-market reevaluation of our securities portfolio.

Combined, we have estimated these events to have impacted our topline revenues by $16.5 million for the quarter and operating income by $5.3 million or $0.15 per share. Below the line, the loss on securities accounted for pretax charge up $3.4 million or $0.09 per share.

On a pro forma basis, the combination of these factors reduce Universal's operating margin by a 100 basis points and earnings per share by $0.24.

Looking at our segment performance for the first quarter of 2020, in our transportation segment which includes our truckload intermodal and freight brokerage businesses, operating revenues for the quarter rose 3.2% to $254.7 million compared to $246 million in the same quarter last year.

While income from operations decreased $400,000 to $12.1 million to $12.5 million in the first quarter of 2019.

In our logistics segment which is comprises of our value-added services including where we serviced a class A heavy truck market and our dedicated transportation business, income from operations decreased $2.1 million to a $11.7 million on $127 million of total operating revenues.

Compared to operating income up $13.8 million on $130.4 million of total operating revenue in the first quarter of 2019. On our balance sheet, we have cash and cash equivalents totaling $8 million and $6.3 million of marketable security.

Outstanding debt, outstanding interest bearing debt net of $2 million of debt issuance cost totaled $478.8 million at the end of the period. At the end of the first quarter, we have $41.7 million available under our existing revolving credit facility.

Excluding lease liabilities related to ASC 842 are net interest bearing debts reported CCM EBITDA was 3.48 times. Capital expenditures for the quarter totaled $32.8 million. For the remainder of the year, we are expecting capital expenditures to be in the $35 million to $45 million range and interest expense between $14 million and $16 million.

As mentioned in other release, to further preserve our liquidity during these unprecedented events, we've decided to temporarily suspend our quarterly dividend in addition to the cost cutting measures Tim discussed earlier in his comments.

Our goal is to preserve cash in the short term and so there was more clarity on automotive production as well as future import and trucking volumes. As a reminder, Universal's dividend policy allows the company to pay out up to 40% of our net income each year with the target dividend yield of 2% on the stock.

The quarterly dividend is an important part of our long-term capital allocation strategy as Universal had paid out over $143 million in dividend since the inception of this policy. We expect to review the considerations for reinstating our dividend in the back half of the year. With that, Amy, we're ready to take some questions..

[Operator Instructions] Your first question today comes from the line of Chris Wetherbee of Citi. Your line is open..

Yes, great. Thanks, Tim. Good morning, guys..

Good morning, Chris..

I guess, it was helpful to get the update on April as well as some of the vertical concentrations within the revenue for you guys as well. Given that you have a decent amount of customer exposure to end market that are currently sort of shut down.

Can you give us a sense of maybe how to think about sort of the restart, does that happen in 2Q, is it sort of a May and June type of event.

Any color you can give to give us a sense of maybe what that negative 30 for April kind of cadence might be as we move throughout the quarter?.

Well Chris, this is Tim. I can get you, you can say there is a ton of uncertainty. And in talking, many of our equities done well with the customers from day-to-day. I think there's a lot of uncertainty in their mind based on some of the government suffered play on this just the whole world the pandemic.

But what we can say is that in conversations on the auto space, what where what finally hopeful and I use the word hopeful that relisting see things start to start back up some of our mission late May. We're if we try to kick in the can down the road, you never had an approved redone bill, it actually gets here. But that thing we're hopeful for.

I think we mentioned some of the downfalls in Southern California, well Southern California intermodal side, it is heavily placed with retail and some of the conversations we've had on the retail space as you know many of the closing retail as to what not, we can't go into to sort of hiring count.

But there in a little bit of a contrary to say what do we do because we're unsure how the states are going to live, the shelter and place orders. Excuse me. And what season are we going to be buying into this so we can make sure we've been up our stream of freights flowing in the United States. That is also there's a great deal of uncertainty there.

And then, the one phase that seems to have been purchased bought on and continues to give us such some flavor is that food and beverage and consumer good through some of the work we do with them, we stayed relatively -- is it going to be you recently projected.

You there?.

I'm here, the background is within..

Yes. It's something, one of the lines just been dead, not our line. One of the lines. We should finish my comment and then we'll try to correct that real quick. What we're seeing on the consumer side is that they are backing off a little bit on the Q2 regional projections but it's not drastic.

And we're still seeing our beverage type customer still stay and they're going to be within 5% to 6% to 10% of their regional forecast to us. Food's been a little less than that, maybe even less than 5% and in consumer goods or anywhere from 5% to 10%.

One of the areas that we haven’t got a lot of clarity but we know short-term is some of our open deck stuff like steel and metal has taken a pretty big hit. And we expect that to be a trailing hit until some other industrial things come up and running..

And your next question comes from the line of Bruce Chan with Stifel. Your line is open..

Yes good morning, gentlemen. And thanks for the question. Tim, my apologies if I had missed this to some echo or line interference. But you were talking about the $40 million and $60 million wins and dedicated and value-added respectively.

And maybe just want to understand a little bit better, how much of that is bankable and what the effect is of the current situation on those numbers. And then also, where those wins are coming from as far as end market and customer type..

Yeah, thank you. The caller dial tone interference. The end markets that those wins are coming from in the automotive sector and we expect there to be some push out of the initial launches of those projects just based on the uncertainty and when the autos are going to start back up again.

What we would expect is that we will realize and experience some of the revenues and later in the second half of the year and in into 2021. But through constant conversation, we're very optimistic that these launches will still take place. We think that they're probably going to be pushed back several months.

And I say that within our straits of course because it seems like every week if communication things get pushed out around and a lot of it isn't because of industrial one, should because we're all trying to figure out what the individual state shelter and place rules are and when we can safely go back to work..

Okay, that's great color. That makes sense. And then maybe just a follow-up on your comments about the agent additions in the first few weeks of the year. How have those trended now given what's been going on in late March and into April.

Are those decelerating, are they accelerating as maybe joining onto a bigger system at a bigger network looks more attractive than kind of flying so low and what are your expectations for those trends in the future?.

Yes and yes. I guess we've seen a couple of different phenomenon. There are some unique opportunities that are rising here early in the second quarter because of decisions made by other companies of how they want to streamline their processes.

Our pipeline remains very bullish here and the ones that we have in there that we feel we have a really good chance of getting, there's a high level of interest from that agent group. The only thing that's holding them back is they want to make sure as they make transitions that their customer base is on board with that.

So they kind of, they haven't drudged their feet, they're just kind of measuring it out to make sure their customers are comfortable with it. We'll roll in for business and ready to make this transitioning as they become comfortable with it. And we can do that in a pretty quick amount of time.

So, if I look at the back end of the quarter in our pipeline, I'm still very optimistic. We still have a good traction. So, I don't see a decelerating atmosphere. The only thing that changed really is your face-to-face conversations now with those types. A lot of that's done remotely and on the phone.

So, you lose a little good with that and we're still making some pretty good headway..

Okay, that's helpful. And then maybe just one last one here. On the fleet capacity side, what are you seeing as far as retention and what's going on with the capacity pool both within Universal and then outside.

And then what are you doing to maybe sort of protect some of those numbers and some of that retention?.

Yes, from a capacity side of things on the transportation end, a couple of different things we can look at here. We know that or caught with business being down, the amount of active drivers both contractors and drivers that are being utilized is less than it would be in a normal environment.

We know the funny thing of it is we've tried to keep a large group of them busy even though we've had to stretch the workout a little bit. I looked at the turnover numbers or actually looked at last numbers the other day. In our loss of contractors and drivers over the last eight weeks and specifically the April has been very minimal.

I want to say its 100 percentage. So, basically our contractors and drivers are staying put right now and as things and we're in constant communication with them. And things start to ramp up and we'll meter those drivers back in and contractors back into the active loop that they were prior to the slowdown..

Great. Well, I'll turn it over, I appreciate the time as always..

Thanks Bruce, thank you..

And we have Mr. Wetherbee line open again, we did have some interfering there. So, I'll join Mr. Wetherbee, so he can continue with question..

Perfect..

Great.

Hey, thanks guys, can you hear me?.

Yes, we can..

We can..

Great, thanks for letting me back in. There must have been something going on with the line there. So, sorry about that. But in terms of I guess my follow-up question was going to be on the flipside of sort of revenue variability. When you think about sort of the cost side, you mentioned some of the direct labor.

Can you talk a little bit about how you're positioning sort of the downside on the cost side? How much of the costs are truly variable given the business model as we think about sort of this decline in revenue..

Hey Chris, it's Jude. So, when we look at Q2 based on the ramp-up of the automotive, I mean, the delta on our top line revenue could be at a low end at $250 million and at the high end $300 million.

So, we have about a $50 million delta based on when if the automotive companies can restart in the middle of May and commit to the production schedules that they've laid out to us over the past couple of weeks.

When you look at our costs, I mean across most of the service lines, the variable nature of the cost is anywhere between 70% to 80% of those of our total revenues, so it's a material amount of those of our business is a variable cost structure.

Which is the reason why we're still paying down debt, we're still able to pay our bills, and we just don't have the fixed cost that many of our competitors do in the space.

So, that's the benefit of our business model, the reason why we've continued to invest in businesses and our M&A strategy related around these independent contractor businesses and we'll continue to do that once we get out of this rut..

Yes, okay. Now, that's super helpful. And obviously, the first quarter performance was quite strong, kind of excluding some of the dynamics that you highlighted there.

I guess when we start to think bigger picture and sort of beyond this, I guess maybe trying to understand your positioning in terms of upside sort of the dream about when we come out of this and think about the potential opportunities there.

I guess maybe the question is more around sort of the pipeline of new business opportunities and how quickly you think you can kind of convert those. And then maybe as you think about '21, maybe this has to do with the shape of the recovery.

But, you could get yourself in a scenario where revenues are kind of at least approaching where they had been on a run rate basis before that. So, there's a lot of sort of pieces in that question but want to get a sense there because clearly you're beginning to show some of that operating leverage in margin expansion.

Just want to get a sense of how you're thinking about the pipeline of business maybe existing business ramping back up and new business wins..

Yes, I'll start and then Tim can answer the questions on the pipeline and the conversion. So Chris, I mean our as we have been saying over the past couple of years, I mean we believe that the business volumes that we have currently pre-COVID-19, the business should be operating between 7% and 9% operating margins. And we believe that.

As you know in the past, we've had the legal headwinds, we've had some drama with launches and all that kind of stuff. But on a run rate basis, 7% to 9% we believe is where the business stands today.

On a long-term basis as we continue to gain leverage and gain scale with the investments that we're making and additional real-estate properties as well as our M&A strategy. We were going to start then focusing as we grow to get that 8% to 10% margin. And long-term, our long-term operating margin target for Universal is 10%.

It'll take us a while to get there. But, we firmly believe with the service lines that we have and the weighting of those lines as they grow, particularly our intermodal, our value add in our dedicated business because the margins are within those ranges already, that we can expand upon them as we get scale.

And I'll turn it over to Tim for discussion on the pipeline..

Yes, thank you. Our pipeline from a customer perspective, feels like I've mentioned still remains robust. Our communication and contact with them has been a little bit darker over the last four weeks. But everything that we have in the pipeline on all sides of the business has responded well.

As we spoke on the onset about the activity in the win we had on the logistic side, there's some other things that are in the pipeline right now that we feel pretty strongly that we have a chance to add to that pretty large number. And we're truly sure that we can execute on it. It's just a matter of what price points that comes in at.

From a trucking perspective, we mentioned the new agent at and some of the things in the pipeline that we'll be bringing on more so the local and regional side of it, we're really taking a hard look at redirecting our services to more of a local food, beverage and consumers good.

So, we're heavily out there looking at actively taking some additional swings at that type of freight to continue to build out that network. So, we're pretty positive and optimistic on that pipeline.

And then on the intermodal side, the pipeline is bold, the customers just can't they can't tell us for sure when some of this stuff is going to come back. We have some pretty substantial things in the pipeline working just waiting to see what the cadence is going to be of international trade. And hopefully, we'll then some of that sooner or later.

And then you can kind of see right now dedicated lives on our customer, our customer base were pretty heavily involved around the automotive. And that's another area that where we'll take a hard look at. And in our book, we're looking at not only current customers to transition, some of that do but also in conversions that we can go after.

So, the pipeline's healthy. We're unsure of how long it takes to come out of this COVID drag that we're in right now. But, we're pretty confident that as we stretch our legs later in the second half of the year that we would be in continuing results from as a result of the pipeline..

Okay, that's really helpful. I appreciate the time. Thanks, guys..

Thanks, Chris..

[Operator Instructions] Your next question comes from the line of Jeff Kauffman of Loop Capital Markets. Your line is open..

Thank you, very much. Good morning, everyone..

Good morning, Jeff..

Good morning..

I just want to go back and make sure I interpreted some of your commentary correct.

Did you say on CapEx you'd spent about $33 million year-to-date and I'm assuming this is gross not net and that the rest of year was going to be $35 million to $45 million? So, we're going to total something in the $69 million to $75 million range?.

Yes. Probably it'll end up being more in the $70 million to $80 million range. But yes, you're in the ballpark..

Okay, got you. And the decision to postpone the dividend and I again, your guidance is that your goal has always been about a 2% yield.

So, am I right to think that we're not going to worry about what we used to pay if we reconsider reinstating it that the goal is about a 2% yield and you can spend up to 40% of net income?.

Yes. So, what we just tried to do with that job is that we want to have a steady quarterly dividend, right? And so we grew the dividends now to $10.50 per share and we'll continue to grow that dividend once we get out of the situation that we find ourselves in.

It's just that the abrupt nature of what happened to Universal in the third week of March and of course the volumes on our dedicated business going from $12 million a month to zero and our value add business going from $30 million a month to zero. We just had to make some very difficult position.

And of course, Tim, myself, in conjunction with conversations with the Board, just felt it was prudent for us to do that in particular with the number of people that we have laid off and in addition to the uncertainty related to the future. But the dividend is a huge part of what we do, it's a huge part of our capital allocation strategy.

Like I mentioned in my comments, I mean we've returned a $143 million to shareholders since the policy was implemented a number of years ago and we'll continue that policy once we have a little more clarity on the future..

So, I guess my question is, by getting rid of the dividend and abolishing it basically for an unknown period of time, you're driving away investors that would own the stock for yield or have a yield requirement. Why not since we're talking about a savings in the $2 million to $4 million range based on my understanding your language.

Why not reduce the dividend to a 2% yield and at least send the signal that we think we're fine and our cash flows are okay..

Yes I mean, I think that was just the decision that we feel very comfortable, Jeff, with what we did.

We have to make sure that we can preserve the integrity of our balance sheet that we can fund the business that we have today, that we can fund the capital expenditures for the launches and the business wins that Tim mentioned earlier in his comments. And it was a decision that we made on our capital allocation strategy.

And yes, there may be some investors that are pushed away as a result of that. But if you can't pay your bills, there's a lot bigger problems than you can have than worrying about someone that's chasing yield. It's just the reality of where we are today. And like I said, we'll look at it in the back half of the year and make the decision at that time..

Okay, I understand, thank you. And on the mark-to-market adjustment for the quarter, I understand that the market was down substantially.

Can you talk a little bit about marketable securities and given the pack in the market, are we going to have a potential mark-to-market adjustment upward just based on where today is as let's say markets didn't change to the end of June.

I just want to –- yes?.

Absolutely, Jeff. So, normally the portfolio doesn't cause this much drama as it did in Q1. Our portfolio is heavily weighted towards banks and oil companies that pay dividends. And so, we kind of used that as a mitigation against our interest expense and generate a little bit of cash.

So, you think about what happened in Q1 with the banks, obviously interest rates going basically to zero. And of course, as a result, their net interest margin going to zero or negative. And of course, the oil price war between Saudi Arabia and Russia that's pushed at one time, was taxed with the negative 30 a barrel.

It's just had a real detrimental impact on that portfolio in Q1. We've already experienced some of those gains back in Q2. So yes, our expectation is that that thing will slowly crawl back to hopefully even which is about $9.3 million that we finished the year with.

And yes, we should expect some gains in Q2 based on at least what we've seen up until yesterday..

Okay. And then just one detailed question and a thought question because I couldn't hear you with the line interference that we had.

When you were giving guidance on interest expense, I thought I heard you say rest of your $14 million to $15 million, does that sound right?.

So, its $14 million to $16 million I believe in the commentary..

For the rest of year not full-year, correct?.

That's full year..

Okay full year, alright. So, given this unusual environment we're in, you're not the only company to be conserving cash. And generally you're in an acquisition mode and I got a picture there is a lot of opportunities you've been looking at that have become distressed over the last couple of weeks.

Given what you're doing with dividend, given what you're doing with cash flow conservation, is it fair to assume the strategic decisions are off the table at this point?.

No. This is Jude. No, I would not say that at all. I mean, I think we've laid out what our focus is as a company. I mean, we've mentioned it a number of times we're paying down debt, evaluating acquisition opportunities and returning capital to shareholders. Universal is not changing that strategy, we believe that's the right strategy for the company.

We're always looking at acquisition opportunities. The difficult thing is just like what Tim mentioned with the pipeline is that everything is over the phone or via email. There's no way to visit management or fly someplace.

So, I think if there if any of these if any deal comes to fruition, it'll just have to be later when things open back up and we're able to talk to people and get more information.

As you guys are probably well aware of them, there's so many people working from home, they don't necessarily have access to all of the things that they do when they're at their job. So, our policy isn't going to change. We're still looking at M&A and we'll continue to do that.

And of course, if the opportunity is right, we'll look at it in the back half of the year..

Alright. Well, thank you for the answers. Its terrific results in a very difficult environment and good luck. Thank you..

Thank you..

Thank you..

[Operator Instructions]. And at this time, there are no further questions in queue. I turn the call back to the presenters for any closing remarks..

Yes, thank you. Once again apologize for any of the interference that we had. I think this sums up what we're looking at right now in the second quarter. There's no clarity to a lot of the things but hopefully we answered the questions, gave you some indication the best of our ability. Appreciate everybody dialing-in and we'll talk to you soon.

Thank you..

And ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect..