LONG BEACH, Calif., Dec. 6, 2007 (PRIME NEWSWIRE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today reported financial results for its third fiscal quarter ended October 31, 2007, reflecting continued revenue growth over the prior-year comparative quarter.
Fiscal Third Quarter 2008 vs. 2007 Results:
* Gross revenues increased 25 percent to $1.2 billion from $946.3 million. * Net revenues increased 24 percent to $391.0 million from $316.2 million. * Operating margin (operating income as a percentage of net revenue) was 12.5 percent, compared to 14.3 percent. * Net income increased 14 percent to $34.9 million, or $0.35 per diluted share, from $30.5 million, or $0.31 per diluted share.
"We're pleased to see excellent revenue growth across our regions, which validates our strategy of broadened service offerings," said Roger I. MacFarlane, chief executive officer of UTi Worldwide. "The solid net revenue growth was particularly gratifying even with lower freight yields and a slow domestic trucking market. We fully realized the benefits of our planned cost reduction measures during the quarter, further improving expense ratios, which contributed to a sequential increase in operating margins. We remain focused on operating margin improvement under our CLIENTasONE strategy, as we continue to grow our business."
The gross and net revenue gains for the fiscal 2008 third quarter were attributed to organic growth across all geographic regions, as well as contributions from acquisitions made by the company since August 1, 2006. The company's gross and net revenues, excluding acquisitions, increased 21 percent and 16 percent, respectively, in the fiscal 2008 third quarter over the prior-year period, reflecting robust overall volume growth and new business wins.
Operating expenses in the third quarter of fiscal 2008 increased 26 percent to $342.2 million, compared to $270.9 million in the same period last year. The increase primarily reflects additional costs to support the company's overall growth, as well as acquisitions, partially offset by benefits from the company's cost reduction initiatives. Operating expenses in the fiscal 2008 third quarter include staff costs of $3.4 million associated with a contract logistics operation in the Americas. The company has not recognized revenue in relation to these costs as it is currently engaged in negotiations with the client to resolve a contract dispute related to this operation. In addition, operating expenses include approximately $2 million for severance costs and expenses associated with the company's ongoing efforts to cooperate with the U.S. Department of Justice's publicly announced investigation into the pricing practices of air carriers and forwarders.
Operating income in the third quarter of fiscal 2008 totaled $48.8 million, an increase of eight percent over operating income in the fiscal 2007 third quarter of $45.3 million. Operating income as a percentage of net revenues for the third quarter of fiscal 2008 was 12.5 percent, compared to 14.3 percent in the same period last year. The operating margin in the fiscal 2008 third quarter improved sequentially over the 11.8 percent reported in the company's second quarter of fiscal 2008.
Other income in the fiscal 2008 third quarter includes a benefit of $2.5 million resulting from the merger that was part of the Israeli acquisition previously announced. This transaction was completed in October 2007, and the full operational benefits will be realized in the future.
Investor Conference Call
UTi management will host an investor conference call today, December 6, 2007, at 8:00 a.m. PST (11:00 a.m. EST) to review the company's financials and operations for the fiscal 2008 third quarter. The call will be open to all interested investors through a live, listen-only audio Internet broadcast at www.go2uti.com and www.earnings.com. For those who are not available to listen to the live broadcast, the call will be archived for one year at both Web sites. A telephonic playback of the conference call also will be available from approximately 11:00 a.m. PST, today, through December 13, 2007, by calling 800-642-1687 (domestic) or 706-645-9291 (international) and using replay passcode 23807560.
About UTi Worldwide
UTi Worldwide Inc. is an international, non-asset-based supply chain services and solutions company providing air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, truckload brokerage and other supply chain management services. The company serves a large and diverse base of global and local companies, including clients operating in industries with unique supply chain requirements such as the pharmaceutical, retail, apparel, chemical, automotive and technology industries. The company seeks to use its global network, proprietary information technology systems, relationships with transportation providers and expertise in outsourced logistics services to deliver competitive advantage to each of its clients' supply chains.
Use of Non-GAAP Financial Information
This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules. We believe that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Short-term patterns and long-term trends may be obscured by the impact of certain items. For this reason, we have referred to gross and net revenue growth adjusted to exclude the impact of acquisitions made since the beginning of the comparative period. This information is among the information the company uses as a basis for evaluating company performance on a comparable basis over time, allocating resources and planning and forecasting of future periods. This information is not intended to be considered in isolation or as a substitute for gross and net revenue growth calculated in accordance with U.S. GAAP.
Safe Harbor Statement
Certain statements in this news release may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The company intends that all such statements be subject to the "safe-harbor" provisions contained in those sections. Such statements may include, but are not limited to, CLIENTasONE, the company's long-term strategy, the company's discussion of its financial goals, including but not limited to margin improvement. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statements, including integration risks associated with acquisitions; the previously announced Department of Justice investigation into the pricing practices of air carriers and forwarders; a challenging operating environment; increased competition; the impact of higher fuel costs; the effects of changes in foreign exchange rates; changes in the company's effective tax rates; industry consolidation making it more difficult to compete against larger companies; general economic, political and market conditions, including those in Africa, Asia and Europe; risks of international operations; the success and effects of new strategies; and the other risks and uncertainties described in the company's filings with the Securities and Exchange Commission. Although UTi believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, we cannot assure you that the results contemplated in forward-looking statements will be realized in the timeframe anticipated or at all. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by UTi or any other person that UTi's objectives or plans will be achieved. Accordingly, investors are cautioned not to place undue reliance on our forward-looking statements. UTi undertakes 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 law.
UTi Worldwide Inc. Condensed Consolidated Income Statement (in thousands, except share and per share amounts) Three months ended Nine months ended October 31, October 31, -------------------------- -------------------------- 2007 2006 2007 2006 ------------ ------------ ------------ ------------ (Unaudited) Gross revenues: Airfreight forwarding $ 469,307 $ 374,406 $ 1,201,560 $ 1,023,508 Ocean freight forwarding 299,580 244,044 796,994 684,793 Customs brokerage 25,209 22,147 71,099 63,971 Contract logistics 164,335 119,946 466,232 343,791 Distribution 128,982 127,346 372,468 329,696 Other 95,632 58,432 265,031 164,335 ------------ ------------ ------------ ------------ Total gross revenues $ 1,183,045 $ 946,321 $ 3,173,384 $ 2,610,094 ============ ============ ============ ============ Net revenues: Airfreight forwarding $ 101,923 $ 87,045 $ 281,182 $ 243,419 Ocean freight forwarding 45,944 39,815 125,694 107,625 Customs brokerage 24,305 21,509 68,702 62,304 Contract logistics 141,346 102,136 400,826 296,728 Distribution 37,999 41,439 108,601 111,409 Other 39,516 24,286 108,917 71,784 ------------ ------------ ------------ ------------ Total net revenues 391,033 316,230 1,093,922 893,269 Staff costs 206,727 162,875 587,360 461,104 Depreciation and amortization 10,067 8,339 29,304 23,560 Amortization of intangible assets 2,051 2,049 6,089 6,092 Other operating expenses 123,343 97,636 347,593 276,702 ------------ ------------ ------------ ------------ Operating income 48,845 45,331 123,576 125,811 Interest expense, net (3,922) (4,042) (11,751) (10,595) Other income 3,224 276 2,690 208 ------------ ------------ ------------ ------------ Pretax income 48,147 41,565 114,515 115,424 Provision for income taxes (12,360) (10,153) (31,248) (27,849) ------------ ------------ ------------ ------------ Income before minority interests 35,787 31,412 83,267 87,575 Minority interests (902) (924) (2,595) (3,259) ------------ ------------ ------------ ------------ Net income (1) $ 34,885 $ 30,488 $ 80,672 $ 84,316 ============ ============ ============ ============ Basic earnings per share $ 0.35 $ 0.31 $ 0.81 $ 0.87 Diluted earnings per share $ 0.35 $ 0.31 $ 0.80 $ 0.85 Number of weighted- average shares outstanding used for per share calculations: Basic shares 99,274,975 97,300,123 99,017,693 96,368,125 Diluted shares 100,347,982 99,807,535 100,223,937 98,715,465 (1) In connection with our December 2006 restatement, net income for the three and nine months ended October 31, 2006 was increased by $9,708 and $12,440, respectively, of non-cash items. UTi Worldwide Inc. Condensed Consolidated Balance Sheets (in thousands) October 31, January 31, 2007 2007 ------------ ------------ (Unaudited) ASSETS Cash and cash equivalents $ 238,389 $ 278,408 Trade receivables, net 909,404 662,804 Deferred income tax assets 18,981 10,889 Other current assets 75,386 57,563 ------------ ------------ Total current assets 1,242,160 1,009,664 Property, plant and equipment, net 155,082 127,990 Goodwill and other intangible assets, net 615,554 490,884 Investments 4,257 3,096 Deferred income tax assets 14,478 12,725 Other non-current assets 21,129 15,511 ------------ ------------ Total assets $ 2,052,660 $ 1,659,870 ============ ============ LIABILITIES & SHAREHOLDERS' EQUITY Bank lines of credit $ 103,352 $ 79,057 Short-term borrowings 6,918 2,808 Current portion of capital lease obligations 21,118 13,550 Trade payables and other accrued liabilities 785,303 603,575 Income taxes payable 26,083 15,333 Deferred income tax liabilities 3,974 3,954 ------------ ------------ Total current liabilities 946,748 718,277 Long-term borrowings 211,163 211,458 Capital lease obligations 29,217 24,099 Deferred income tax liabilities 34,342 30,291 Retirement fund obligations 7,590 7,549 Other long-term liabilities 12,334 12,078 Minority interests 32,069 18,844 Commitments and contingencies Shareholders' equity: Common stock 431,941 419,111 Retained earnings 338,645 266,136 Accumulated other comprehensive loss 8,611 (47,973) ------------ ------------ Total shareholders' equity 779,197 637,274 ------------ ------------ Total liabilities and shareholders' equity $ 2,052,660 $ 1,659,870 ============ ============ UTi Worldwide Inc. Consolidated Statements of Cash Flows (in thousands) Nine months ended October 31, -------------------------- 2007 2006 ------------ ------------ (Unaudited) OPERATING ACTIVITIES: Net income $ 80,672 $ 84,316 Adjustments to reconcile net income to net cash used in operating activities: Share-based compensation costs, net 6,872 (5,557) Depreciation and amortization 29,304 23,560 Amortization of intangible assets 6,089 6,092 Deferred income taxes (329) (2,425) Tax benefit relating to exercise of stock options 1,211 944 Excess tax benefits from share-based compensation (402) (743) Gain on disposal of property, plant and equipment (20) (258) Minority interest and other 195 3,259 Changes in operating assets and liabilities: Increase in trade receivables (172,763) (170,611) (Increase) in other current assets (1,309) 2,760 Increase in trade payables 50,063 56,703 Increase in accrued liabilities and other current liabilities 37,873 26,018 ------------ ------------ Net cash provided by operating activities 37,456 24,058 INVESTING ACTIVITIES: Purchases of property, plant and equipment (23,720) (16,015) Proceeds from disposal of property, plant and equipment 2,049 2,383 Increase in other non-current assets (3,655) (6,504) Acquisitions and contingent earn-out payments (66,410) (200,749) Other (922) (2,103) ------------ ------------ Net cash used in investing activities (92,658) (222,988) FINANCING ACTIVITIES: Increase/(decrease) in borrowings under bank lines of credit 15,285 (22,519) Increase in short-term borrowings (1,700) (1,605) Proceeds from issuing of long-term borrowings -- 812 Repayment of long-term borrowings (484) (2,777) Net proceeds from issuance of senior notes -- 198,823 Repayments of capital lease obligations (15,517) (6,722) Net proceeds from issuance of ordinary shares 4,746 9,961 Excess tax benefits from share-based compensation 402 743 Dividends paid (5,926) (5,775) ------------ ------------ Net cash (used in)/provided by financing activities (3,194) 170,941 Effect of foreign exchange rate changes on cash and cash equivalents 18,377 (15,303) ------------ ------------ Net decrease in cash and cash equivalents (40,019) (43,292) Cash and cash equivalents at beginning of period 278,408 246,510 ------------ ------------ Cash and cash equivalents at end of period $ 238,389 $ 203,218 ============ ============ UTi Worldwide Inc. Segment Reporting (in thousands) Three months ended October 31, 2007 ------------------------------------------------ Americas Contract Americas Logistics Freight and Asia EMENA Forwarding Distribution Pacific --------- ---------- ------------ --------- Gross revenue $ 299,404 $ 166,332 $ 214,761 $ 133,581 ========= ========= ========= ========= Net revenue $ 90,665 $ 46,224 $ 125,346 $ 25,987 Staff costs 49,647 23,740 72,893 11,306 Depreciation and amortization 2,169 629 2,997 564 Amortization of intangible assets -- -- 1,777 -- Other operating expenses 26,143 12,904 38,344 5,618 --------- --------- --------- --------- Operating income/(loss) $ 12,706 $ 8,951 $ 9,335 $ 8,499 ========= ========= ========= ========= Interest expense, net Other income Pretax income Provision for income taxes Income before minority interests ---------------------------------------------------- Global Greater Specialized China Africa Solutions Corporate Total --------- --------- -------- --------- ---------- Gross revenue $ 194,873 $ 152,896 $ 21,198 $ -- $1,183,045 ========= ========= ======== ======== ========== Net revenue $ 22,638 $ 61,379 $ 18,794 $ -- $ 391,033 Staff costs 7,570 27,793 8,422 5,356 206,727 Depreciation and amortization 627 2,059 486 536 10,067 Amortization of intangible assets 112 -- 162 -- 2,051 Other operating expenses 6,185 21,512 8,201 4,436 123,343 --------- --------- -------- -------- ---------- Operating income/(loss) $ 8,144 $ 10,015 $ 1,523 $(10,328) 48,845 ========= ========= ======== ======== Interest expense, net (3,922) Other income 3,224 ---------- Pretax income 48,147 Provision for income taxes (12,360) ---------- Income before minority interests $ 35,787 ========== UTi Worldwide Inc. Segment Reporting (in thousands) Three months ended October 31, 2006 ------------------------------------------------ Americas Contract Americas Logistics Freight and Asia EMENA Forwarding Distribution Pacific --------- ---------- ------------ --------- Gross revenue $ 221,488 $ 141,157 $ 179,616 $ 106,947 ========= ========= ========= ========= Net revenue $ 66,440 $ 40,361 $ 97,008 $ 21,620 Staff costs 37,723 22,691 53,597 9,593 Depreciation and amortization 1,624 608 2,223 468 Amortization of intangible assets -- -- 1,788 -- Other operating expenses 17,349 12,901 29,034 4,811 --------- --------- --------- --------- Operating income/(loss) $ 9,744 $ 4,161 $ 10,366 $ 6,748 ========= ========= ========= ========= Interest expense, net Other income Pretax income Provision for income taxes Income before minority interests ---------------------------------------------------- Global Greater Specialized China Africa Solutions Corporate Total --------- --------- -------- --------- ---------- Gross revenue $ 154,698 $ 126,774 $ 15,641 $ -- $ 946,321 ========= ========= ======== ======== ========== Net revenue $ 22,435 $ 54,751 $ 13,615 $ -- $ 316,230 Staff costs 6,046 24,000 5,669 3,556 162,875 Depreciation and amortization 520 2,077 291 528 8,339 Amortization of intangible assets 111 -- 150 -- 2,049 Other operating expenses 5,179 21,036 3,901 3,425 97,636 --------- --------- -------- -------- ---------- Operating income/(loss) $ 10,579 $ 7,638 $ 3,604 $ (7,509) 45,331 ========= ========= ======== ======== Interest expense, net (4,042) Other income 276 ---------- Pretax income 41,565 Provision for income taxes (10,153) ---------- Income before minority interests $ 31,412 ========== UTi Worldwide Inc. Segment Reporting (in thousands) Nine months ended October 31, 2007 ------------------------------------------------ Americas Contract Americas Logistics Freight and Asia EMENA Forwarding Distribution Pacific --------- ---------- ------------ --------- Gross revenue $ 799,410 $ 451,974 $ 618,717 $ 359,988 ========= ========= ========= ========= Net revenue $ 250,122 $ 129,177 $ 358,316 $ 72,230 Staff costs 137,769 71,083 203,343 33,404 Depreciation and amortization 6,053 1,830 9,471 1,625 Amortization of intangible assets -- -- 5,279 -- Other operating expenses 73,450 36,149 110,046 16,300 --------- --------- --------- --------- Operating income/(loss) $ 32,850 $ 20,115 $ 30,177 $ 20,901 ========= ========= ========= ========= Interest expense, net Other income Pretax income Provision for income taxes Income before minority interests ---------------------------------------------------- Global Greater Specialized China Africa Solutions Corporate Total --------- --------- -------- --------- ---------- Gross revenue $ 458,593 $ 428,014 $ 56,688 $ -- $3,173,384 ========= ========= ======== ======== ========== Net revenue $ 61,491 $ 172,302 $ 50,284 $ -- $1,093,922 Staff costs 22,623 79,383 23,220 16,535 587,360 Depreciation and amortization 1,829 5,770 1,284 1,442 29,304 Amortization of intangible assets 336 -- 474 -- 6,089 Other operating expenses 17,875 60,932 19,484 13,357 347,593 --------- --------- -------- -------- ---------- Operating income/(loss) $ 18,828 $ 26,217 $ 5,822 $(31,334) 123,576 ========= ========= ======== ======== Interest expense, net (11,751) Other income 2,690 ---------- Pretax income 114,515 Provision for income taxes (31,248) ---------- Income before minority interests $ 83,267 ========== UTi Worldwide Inc. Segment Reporting (in thousands) Nine months ended October 31, 2006 ------------------------------------------------ Americas Contract Americas Logistics Freight and Asia EMENA Forwarding Distribution Pacific --------- ---------- ------------ --------- Gross revenue $ 621,444 $ 379,429 $ 482,138 $ 315,066 ========= ========= ========= ========= Net revenue $ 184,711 $ 113,630 $ 272,847 $ 60,306 Staff costs 91,016 67,657 156,007 28,263 Depreciation and amortization 4,643 1,683 6,475 1,303 Amortization of intangible assets -- -- 5,256 -- Other operating expenses 51,285 32,671 80,167 13,933 --------- --------- --------- --------- Operating income/(loss) $ 37,767 $ 11,619 $ 24,942 $ 16,807 ========= ========= ========= ========= Interest expense, net Other income Pretax income Provision for income taxes Income before minority interests ---------------------------------------------------- Global Greater Specialized China Africa Solutions Corporate Total --------- --------- -------- --------- ---------- Gross revenue $ 384,208 $ 378,806 $ 49,003 $ -- $2,610,094 ========= ========= ======== ======== ========== Net revenue $ 58,089 $ 160,250 $ 43,436 $ -- $ 893,269 Staff costs 18,769 71,513 17,748 10,131 461,104 Depreciation and amortization 1,378 5,609 926 1,543 23,560 Amortization of intangible assets 340 -- 496 -- 6,092 Other operating expenses 14,808 59,720 13,643 10,475 276,702 --------- --------- -------- -------- ---------- Operating income/(loss) $ 22,794 $ 23,408 $ 10,623 $(22,149) 125,811 ========= ========= ======== ======== Interest expense, net (10,595) Other income 208 ---------- Pretax income 115,424 Provision for income taxes (27,849) ---------- Income before minority interests $ 87,575 ========== UTi Worldwide Inc. Revenue Growth Reconciliation (in thousands) (Unaudited) Set forth below is a reconciliation of our growth, excluding acquisitions, in our gross and net revenues over the corresponding prior-year period. Growth excluding acquisitions ------------ GROSS REVENUES: Three months ended October 31, 2007 (as reported) $ 1,183,045 Less: Acquisitions impact (2) (38,476) ----------- Three months ended October 31, 2007 (as adjusted) $ 1,144,569 =========== Three months ended October 31, 2006 $ 946,321 21% =========== ==== NET REVENUES: Three months ended October 31, 2007 (as reported) $ 391,033 Less: Acquisitions impact (3) (23,128) ----------- Three months ended October 31, 2007 (as adjusted) $ 367,906 =========== Three months ended October 31, 2006 $ 316,230 16% =========== ==== (2) Represents gross revenues attributable to acquisitions that were completed on or after August 1, 2006. (3) Represents net revenues attributable to acquisitions that were completed on or after August 1, 2006. UTi Worldwide Inc. Revenue Growth Reconciliation (in thousands) (Unaudited) Set forth below is a reconciliation of our growth, excluding acquisitions, in our gross and net revenues over the corresponding prior-year period. Growth excluding acquisitions ------------ GROSS REVENUES: Nine months ended October 31, 2007 (as reported) $ 3,173,384 Less: Acquisitions impact (4) (136,594) ----------- Nine months ended October 31, 2007 (as adjusted) $ 3,036,790 =========== Nine months ended October 31, 2006 $ 2,610,094 16% =========== ==== NET REVENUES: Nine months ended October 31, 2007 (as reported) $ 1,093,922 Less: Acquisitions impact (5) (68,513) ----------- Nine months ended October 31, 2007 (as adjusted) $ 1,025,409 =========== Nine months ended October 31, 2006 $ 893,269 15% =========== ==== (4) Represents gross revenues attributable to acquisitions that were completed on or after February 1, 2006. (5) Represents net revenues attributable to acquisitions that were completed on or after February 1, 2006.