Revenue Growth Continues to Outpace the Market
Cost Reduction Plan On Target
LONG BEACH, Calif., June 5, 2008 (PRIME NEWSWIRE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today reported financial results for its fiscal 2009 first quarter ended April 30, 2008.
Fiscal First Quarter 2009 vs. 2008 Results
* Revenues increased 26 percent to $1,188.1 million from $944.7 million. * Net revenues (revenues minus freight consolidation costs) increased 17 percent to $391.8 million from $336.0 million. * Net income was $13.5 million, or $0.13 per diluted share, compared to $18.1 million, or $0.18 per diluted share.
Excluding after-tax restructuring charges of $4.4 million, adjusted net income in the 2009 fiscal first quarter was $17.9 million, or $0.18 per diluted share. A reconciliation of GAAP to non-GAAP results is provided in the supplemental financial information attached to this release.
"Revenues continued to outpace the market primarily due to solid organic growth," said Roger I. MacFarlane, chief executive officer. "Volumes in our freight forwarding operations were strong and we continued to add new logistics business. The skill and dedication of our people, along with the breadth of our service offering, have enabled us to gain market share in a tough economic environment. We expect to continue this trend in fiscal 2009, but a protracted economic downturn could impede our anticipated growth. As expected, all actions under our cost reduction plan were initiated by the end of the first quarter. While we are already seeing some benefits from these actions, the majority of anticipated improvement is still expected in the second half of fiscal 2009."
Revenue gains for the fiscal 2009 first quarter were due to organic growth in all geographic regions, as well as contributions from acquisitions made by the company since May 1, 2007, and to a lesser extent, to currency fluctuations. The company's adjusted net revenues, excluding acquisitions, increased 13 percent in the fiscal 2009 first quarter, compared to the same period last year.
Operating expenses, excluding freight consolidation costs, in the first quarter of fiscal 2009 totaled $367.9 million. Excluding restructuring charges of $6.0 million, these adjusted operating expenses in the fiscal 2009 first quarter were $361.9 million, an increase of 19 percent compared to the same period last year. The increase primarily reflects costs to support the company's overall growth, as well as costs of $2.5 million incurred by the company as a result of the U.S. Department of Justice's publicly announced investigation into the pricing practices of the international freight forwarding and cargo transportation industry and other related investigations and lawsuits.
First quarter fiscal 2009 operating income totaled $23.9 million, which represented 6.1 percent of net revenues. Excluding restructuring charges, adjusted operating income in the first quarter was $30.0 million, or 7.6 percent of net revenues. This compares to operating income in the same period last year of $31.4 million, or 9.3 percent of net revenues.
As previously announced, the company has undertaken a cost reduction plan to streamline operations and improve operating performance. In total, the plan is expected to reduce annualized expenses by approximately $102 million, and result in associated annualized net revenue reductions of $68 million. The company expects that these anticipated expense and revenue reductions ultimately will result in an increase in its annualized operating income of approximately $34 million and an improvement in its operating margin of approximately 200 basis points with most of these benefits to be realized starting in the second half of fiscal 2009.
Segment Reporting
The company changed its segment reporting in the fiscal 2009 first quarter to reflect the realignment of its management structure around its core business operations, as announced on February 8, 2008. The company's reportable business segments are freight forwarding (including customs brokerage), contract logistics and distribution, and corporate. In conjunction with this change, certain costs that were previously recorded in corporate are now recorded in the freight forwarding and contract logistics and distribution segments. Comparative information has been provided for each quarter in fiscal 2008 to reflect this allocation. The company will continue to provide geographic information in supplemental schedules. These changes and reclassifications had no effect on the company's reported earnings, or earnings per basic and diluted share.
Investor Conference Call
UTi management will host an investor conference call today, June 5, 2008, at 8:00 a.m. PDT (11:00 a.m. EDT) to review the company's financials and operations for the fiscal 2009 first quarter. Investment professionals are invited to participate in the live call by dialing 888-505-2282 (domestic) or 706-634-5910 (international) using conference ID 48514002. 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. PDT, today, through June 12, 2008, by calling 800-642-1687 (domestic) or 706-645-9291 (international) and using replay passcode 48514002.
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. UTi believes that meaningful analysis of its financial performance requires an understanding of the factors underlying that performance and the company's 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, the company has referred to revenue and net revenue growth adjusted to exclude the impact of acquisitions made since the beginning of the comparative period, as well as operating expenses excluding freight consolidation costs, operating income, net income and diluted earnings per share adjusted to exclude restructuring expenses. 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. The company has also provided this information because such adjustments make performance information more comparable to prior disclosures for investors, and may enhance the ability of investors to analyze the company's performance. This information is not intended to be considered in isolation or as a substitute for the relevant measures 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, the company's discussion of its expected volume trends and financial goals, as well as the expected impact of the company's cost reduction program. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statements, including but not limited to economic conditions that are adversely affecting trade volumes; clients' demand for the company's services; the impact of cost reduction measures recently undertaken by the company and the timing of the expected benefits from such measures; integration risks associated with acquisitions; the ability to retain client and management of acquisition targets; 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 EMENA; work stoppages or slowdowns or other material interruptions in transportation services; risks of international operations; risks associated with, and costs and expenses the company will incur as a result of, the ongoing publicly announced U.S. Department of Justice and other governmental investigations into the pricing practices of the international freight forwarding and cargo transportation industry and other similar or related investigations and lawsuits; the success and effects of new strategies and of the realignment of the company's executive management structure; disruptions caused by epidemics, conflicts, wars and terrorism; 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, the company 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 the company's 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 Statements
(in thousands, except share and per share amounts)
Three months ended
April 30,
----------------------------
2008 2007
------------ ------------
(Unaudited) (Unaudited)
Revenues:
Airfreight forwarding $ 449,790 $ 318,739
Ocean freight forwarding 293,503 232,290
Customs brokerage 28,243 21,883
Contract logistics 164,803 141,515
Distribution 149,379 144,256
Other 102,429 86,055
------------ ------------
Total revenues 1,188,147 944,738
------------ ------------
Operating expenses:
Freight consolidation costs:
Airfreight forwarding 361,441 248,495
Ocean freight forwarding 248,665 195,315
Customs brokerage 1,530 725
Contract logistics 20,873 19,774
Distribution 105,357 93,741
Other 58,454 50,647
Staff costs 217,834 184,717
Depreciation and amortization 10,301 9,387
Amortization of intangible assets 3,102 1,985
Restructuring and impairments 6,036 --
Other operating expenses 130,622 108,534
------------ ------------
Total operating expenses 1,164,215 913,320
------------ ------------
Operating income 23,932 31,418
Interest income 3,191 2,206
Interest expense (7,735) (6,297)
Other income/(expense) 440 (368)
------------ ------------
Pretax income 19,828 26,959
Provision for income taxes 5,489 7,967
------------ ------------
Income before minority interests 14,339 18,992
Minority interests (797) (872)
------------ ------------
Net income $ 13,542 $ 18,120
============ ============
Basic earnings per share $ 0.14 $ 0.18
Diluted earnings per share $ 0.13 $ 0.18
Number of weighted-average shares
outstanding used for per share
calculations:
Basic shares 99,180,213 98,659,869
Diluted shares 100,617,409 100,209,000
UTi Worldwide Inc.
Condensed Consolidated Balance Sheets
(in thousands)
April 30, January 31,
2008 2008
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 271,170 $ 289,141
Trade receivables, net 948,676 865,019
Deferred income tax assets 20,774 18,768
Other current assets 93,045 79,207
------------ ------------
Total current assets 1,333,665 1,252,135
Property, plant and equipment, net 158,676 154,123
Goodwill 544,012 537,429
Other intangible assets, net 79,550 80,432
Investments 3,104 2,765
Deferred income tax assets 19,022 17,311
Other non-current assets 31,486 30,481
------------ ------------
Total assets $ 2,169,515 $ 2,074,676
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Bank lines of credit $ 135,720 $ 113,199
Short-term borrowings 6,423 5,913
Current portion of long-term borrowings 33,333 33,333
Current portion of capital lease
obligations 20,358 21,701
Trade payables and other accrued
liabilities 866,712 817,058
Income taxes payable 18,407 12,622
Deferred income tax liabilities 4,999 5,030
------------ ------------
Total current liabilities 1,085,952 1,008,856
Long-term borrowings 178,672 178,047
Capital lease obligations 27,609 30,612
Deferred income tax liabilities 35,627 38,063
Retirement fund obligations 4,531 4,287
Other non-current liabilities 21,397 19,322
Minority interests 21,611 21,289
------------ ------------
Total liabilities 1,375,399 1,300,476
Shareholders' equity:
Common stock 439,603 435,355
Retained earnings 356,570 349,237
Accumulated other comprehensive loss (2,057) (10,392)
------------ ------------
Total shareholders' equity 794,116 774,200
------------ ------------
Commitments and contingencies
Total liabilities and
shareholders' equity $ 2,169,515 $ 2,074,676
============ ============
UTi Worldwide Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three months ended
April 30,
----------------------------
2008 2007
------------ ------------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES:
Net income $ 13,542 $ 18,120
Adjustments to reconcile net income to
net cash used in operations:
Share-based compensation costs, net 2,588 365
Depreciation and amortization 10,301 9,387
Amortization of intangible assets 3,102 1,985
Restructuring and impairments 6,036 --
Deferred income taxes (5,247) (363)
Tax benefit relating to exercise of
stock options 126 42
Excess tax benefits from share-based
compensation (68) (24)
(Gain)/loss on disposal of property,
plant and equipment (198) 29
Minority interest and other 901 (858)
Changes in operating assets and
liabilities:
Increase in trade receivables (77,054) (44,287)
Increase in other current assets (3,259) (3,689)
Increase/(decrease) in trade
payables 10,019 (24,096)
Increase in accrued liabilities
and other liabilities 17,285 6,987
------------ ------------
Net cash used in operating activities (21,926) (36,402)
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (11,742) (6,143)
Proceeds from disposal of property,
plant and equipment 1,269 425
Decrease/(increase) in other non-current
assets 990 (209)
Acquisitions and contingent earn-out
payments (421) (3,666)
Other (332) (818)
------------ ------------
Net cash used in investing activities (10,236) (10,411)
FINANCING ACTIVITIES:
Increase/(decrease) in bank lines of
credit 18,656 (8,615)
Increase/(decrease) in short-term
borrowings 262 (1,570)
Repayment of long-term borrowings (6) (26)
Repayments of capital lease obligations (7,758) (5,487)
Dividends to minority interests (509) --
Net proceeds from the issuance of
ordinary shares 1,660 3,378
Excess tax benefits from share-based
compensation 68 24
Dividends paid -- --
------------ ------------
Net cash provided/(used in) by
financing activities 12,373 (12,296)
Effect of foreign exchange rate changes
on cash and cash equivalents 1,818 5,349
------------ ------------
Net decrease in cash and cash equivalents (17,971) (53,760)
Cash and cash equivalents at beginning
of period 289,141 278,408
------------ ------------
Cash and cash equivalents at end of
period $ 271,170 $ 224,648
============ ============
UTi Worldwide Inc.
Segment Reporting
(in thousands)
(Unaudited)
Three months ended April 30, 2008
-------------------------------------------------
Contract
Logistics
Freight and
Forwarding Distribution Corporate Total
--------- --------- --------- ----------
Revenues $ 826,193 $ 361,954 $ -- $1,188,147
--------- --------- --------- ----------
Freight
consolidation
costs 650,524 145,796 -- 796,320
Staff costs 99,171 116,252 2,411 217,834
Depreciation and
amortization 3,812 6,406 83 10,301
Amortization of
intangible assets 845 2,257 -- 3,102
Restructuring
and impairments 2,382 3,654 -- 6,036
Other operating
expenses 41,578 84,086 4,958 130,622
--------- --------- --------- ----------
Total operating
expenses 798,312 358,451 7,452 1,164,215
--------- --------- --------- ----------
Operating
income/(loss) $ 27,881 $ 3,503 $ (7,452) 23,932
========= ========= =========
Interest income 3,191
Interest expense (7,735)
Other income 440
----------
Pretax income 19,828
Provision for
income taxes 5,489
----------
Income before
minority
Interests 14,339
Minority interests (797)
----------
Net income $ 13,542
==========
UTi Worldwide Inc.
Segment Reporting
(in thousands)
(Unaudited)
Three months ended April 30, 2007
-------------------------------------------------
Contract
Logistics
Freight and
Forwarding Distribution Corporate Total
--------- --------- --------- ----------
Revenues $ 612,088 $ 332,650 $ -- $ 944,738
--------- --------- --------- ----------
Freight
consolidation
costs 474,516 134,181 -- 608,697
Staff costs 77,545 104,018 3,154 184,717
Depreciation and
amortization 3,203 6,145 39 9,387
Amortization of
intangible assets -- 1,985 -- 1,985
Restructuring
and impairments -- -- -- --
Other operating
expenses 32,577 73,754 2,203 108,534
--------- --------- --------- ----------
Total operating
expenses 587,841 320,083 5,396 913,320
--------- --------- --------- ----------
Operating
income/(loss) $ 24,247 $ 12,567 $ (5,396) 31,418
========= ========= =========
Interest income 2,206
Interest expense (6,297)
Other income (368)
----------
Pretax income 26,959
Provision for
income taxes 7,967
----------
Income before
minority
Interests 18,992
Minority interests (872)
----------
Net income $ 18,120
==========
UTi Worldwide Inc.
Geographic Reporting
(in thousands)
(Unaudited)
Three months ended April 30, 2008
----------------------------------------------------------
Asia
EMENA Americas Pacific Africa Corporate Total
-------- -------- -------- -------- -------- --------
Revenues
Freight
Forward-
ing $282,233 $159,790 $288,748 $ 95,422 $ -- $826,193
Contract
Logistics
and
Distrib-
ution 71,578 209,247 7,652 73,477 -- 361,954
Net Revenue
Freight
Forward-
ing 69,626 41,522 41,661 22,860 -- 175,669
Contract
Logistics
and
Distrib-
ution 42,713 115,422 5,134 52,889 -- 216,158
Operating
income/
(loss) 5,785 5,886 10,283 9,430 (7,452) 23,932
Restructuring
and
impairments 1,572 3,737 240 487 -- 6,036
Three months ended April 30, 2007
----------------------------------------------------------
Asia
EMENA Americas Pacific Africa Corporate Total
-------- -------- -------- -------- -------- --------
Revenues
Freight
Forward-
ing $180,633 $131,033 $218,164 $ 82,258 $ -- $612,088
Contract
Logistics
and
Distrib-
ution 58,873 199,507 7,143 67,127 -- 332,650
Net Revenue
Freight
Forward-
ing 45,691 37,715 35,299 18,867 -- 137,572
Contract
Logistics
and
Distrib-
ution 30,161 114,615 4,970 48,723 -- 198,469
Operating
income/
(loss) 7,220 12,875 8,524 8,195 (5,396) 31,418
Restructuring
and
impairments -- -- -- -- -- --
UTi Worldwide Inc.
Revenue Growth Reconciliation
(in thousands)
(Unaudited)
Set forth below is a reconciliation of our growth, excluding
acquisitions, in our revenues and net revenues over the corresponding
prior-year period.
Growth
excluding
acquisitions
------------
REVENUES:
Three months ended April 30, 2008
(as reported) $1,188,147
Less: Acquisitions impact(1) (26,921)
----------
Three months ended April 30, 2008
(as adjusted) $1,161,226
==========
Three months ended April 30, 2007 $ 944,738 23%
========== ============
(1) Represents revenues attributable to acquisitions that were
completed on or after February 1, 2007.
Growth
excluding
acquisitions
------------
NET REVENUES:
Three months ended April 30, 2008
(as reported) $ 391,827
Less: Acquisitions impact(2) (12,365)
----------
Three months ended April 30, 2008
(as adjusted) $ 379,462
==========
Three months ended April 30, 2007 $ 336,041 13%
========== ============
(2) Represents net revenues attributable to acquisitions that were
completed on or after February 1, 2007.
UTi Worldwide Inc.
Supplemental Financial Information - Other Information
(in thousands)
(Unaudited)
Twelve Months Ended January 31, 2008
(Unaudited)
Q1 Q2 Q3 Q4 Total
-------- -------- -------- -------- ----------
Freight
Forwarding(1)
Revenues $612,088 $694,224 $812,141 $809,082 $2,927,535
-------- -------- -------- -------- ----------
Freight
consolidation
costs 474,516 538,075 645,666 635,603 2,293,860
Staff costs 77,545 81,322 84,656 94,234 337,757
Depreciation and
amortization 3,203 3,241 3,506 3,711 13,661
Amortization of
intangible
assets -- -- -- 863 863
Restructuring
and impairments -- -- -- 912 912
Other operating
expenses 32,577 37,172 38,776 41,453 149,978
-------- -------- -------- -------- ----------
Total
operating
expenses 587,841 659,810 772,604 776,776 2,797,031
-------- -------- -------- -------- ----------
Operating income $ 24,247 $ 34,414 $ 39,537 $ 32,306 $ 130,504
======== ======== ======== ======== ==========
Contract Logistics
and Distribution(1)
Revenues $332,650 $351,377 $370,904 $396,544 $1,451,475
-------- -------- -------- -------- ----------
Freight
consolidation
costs 134,181 140,678 146,346 167,241 588,446
Staff costs 104,018 111,696 119,197 120,223 455,134
Depreciation and
amortization 6,145 6,541 6,481 6,566 25,733
Amortization of
intangible
assets 1,985 2,053 2,051 2,484 8,573
Restructuring
and impairments -- -- -- 5,800 5,800
Other operating
expenses 73,754 75,770 82,028 88,102 319,654
-------- -------- -------- -------- ----------
Total
operating
expenses 320,083 336,738 356,103 390,416 1,403,340
-------- -------- -------- -------- ----------
Operating income $ 12,567 $ 14,639 $ 14,801 $ 6,128 $ 48,135
======== ======== ======== ======== ==========
(1) The company changed its segment reporting in the fiscal 2009
first quarter to reflect the realignment of its management
structure around its core business operations, as announced on
February 8, 2008. In conjunction with this change, the company
has reallocated certain operational related costs that were
previously reported in corporate to the freight forwarding and
contract logistics and distribution segments.
UTi Worldwide Inc.
Supplemental Financial Information - Reconciliation to US GAAP
(in thousands, except share and per share amounts)
(Unaudited)
Three months ended April 30, 2008
Non
US GAAP Adjustment US GAAP
------------ ------------ ------------
Total
Revenue $ 1,188,147 $ -- $ 1,188,147
============ ============ ============
Freight
consolidation costs $ 796,320 $ -- $ 796,320
Staff costs 217,834 -- 217,834
Depreciation and
amortization 10,301 -- 10,301
Amortization of
intangible assets 3,102 -- 3,102
Restructuring and
impairments 6,036 (6,036) --
Other operating
expenses 130,622 -- 130,622
------------ ------------ ------------
Operating income 23,932 6,036 29,968
Interest expense, net (4,544) -- (4,544)
Other income 440 -- 440
------------ ------------ ------------
Pretax income 19,828 6,036 25,864
Provision for income
taxes 5,489 1,671 7,160
------------ ------------ ------------
Income before
minority interests 14,339 4,365 18,704
Minority interests (797) -- (797)
------------ ------------ ------------
Net income $ 13,542 $ 4,365 $ 17,907
============ ============ ============
Basic earnings
per share $ 0.14 $ 0.04 $ 0.18
Diluted earnings
per share $ 0.13 $ 0.04 $ 0.18
Number of
weighted-average
shares outstanding
used for per share
calculations:
Basic shares 99,180,213 99,180,213 99,180,213
Diluted shares 100,617,409 100,617,409 100,617,409