Weak Freight and Logistics Volumes Continue to Weigh On Results
Cost Reduction Measures On Target
LONG BEACH, Calif., June 4, 2009 (GLOBE NEWSWIRE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today reported financial results for its fiscal 2010 first quarter ended April 30, 2009. Results in the fiscal 2010 first quarter were adversely impacted by continued weak freight and logistics volumes, partially offset by lower transportation and operating costs.
Fiscal First Quarter 2010 vs. 2009 Results: * Revenues decreased 35 percent to $768.4 million from $1,184.5 million. * Net revenues (revenues minus purchased transportation costs) decreased 21 percent to $309.5 million from $389.5 million. * Operating income decreased 25 percent to $17.9 million from $23.7 million. * Net income attributable to UTi Worldwide Inc. was $9.8 million, or $0.10 per diluted share, compared to net income of $13.5 million, or $0.13 per diluted share.
Eric W. Kirchner, chief executive officer, said, "Results in the first quarter continued to be impacted by the macroeconomic conditions and lower than expected transportation and logistics volumes. Purchased transportation costs also decreased, mitigating to some extent the volume deterioration. We continued to respond to the volume declines by reducing our operating costs, although these reductions did not fully offset the decrease in net revenue. We are intensifying our sales efforts to improve revenue growth, particularly in freight forwarding, without sacrificing profitability. These efforts may take some time, but we remain fully committed to our goal of achieving long-term growth and margin improvement."
The decrease in revenues in the 2010 fiscal first quarter compared to the prior-year first quarter was due to the significant decline in forwarding and logistics volumes, currency fluctuations, and the exiting of businesses last year through the company's earlier cost reduction plan. On an organic, constant currency basis, adjusted net revenue declined six percent in the 2010 first quarter compared to the first quarter a year ago.
Operating expenses in the first quarter of fiscal 2010, excluding purchased transportation costs, were $291.7 million, representing a decrease of 20 percent compared to operating expenses in the same period last year. The decrease reflects lower costs associated with the declining volumes, currency fluctuations, and benefits achieved through cost reduction efforts, including the closure of certain operations in the last fiscal year. Included in operating expenses in the fiscal 2010 first quarter were restructuring costs of $1.2 million and severance and other charges of $5.2 million, offset by a $6.3 million gain on the sale of a property in South Africa. Operating expenses in last year's first quarter included restructuring charges of $6.0 million related to the company's cost reduction plan.
The company reported operating income in the fiscal 2010 first quarter of $17.9 million, which represented 5.8 percent of net revenues. This compares to operating income in the year-ago first quarter of $23.7 million, or 6.1 percent of net revenues.
Investor Conference Call:
UTi management will host an investor conference call today, June 4, 2009, at 8:00 a.m. PDT (11:00 a.m. EDT) to review the company's financials and operations for the fiscal 2010 first quarter. Investment professionals are invited to participate in the live call by dialing 877-570-6091 (domestic) or 702-696-4824 (international) using conference ID 10967051. 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 11, 2009, by calling 800-642-1687 (domestic) or 706-645-9291 (international) and using replay passcode 10967051.
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 dispositions and acquisitions made since the beginning of the comparative period and the impact of currency fluctuations between comparable periods, and to operating expenses adjusted to exclude purchased transportation costs. 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 financial goals, the company's goal of growth in revenue and margin improvement, and the outlook for the future. 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 the global economic slowdown that is adversely affecting trade volumes and the financial condition of many of the company's customers; disruptions in the global equity and credit markets which adversely impact the company's operations and ability to refinance its outstanding indebtedness or otherwise raise capital; planned or unplanned consequences of the company's business transformation efforts; the demand for the company's services; the impact of cost reduction measures recently undertaken by the company; the costs and impact of the company's information technology restructuring plan; integration risks associated with acquisitions; increased competition; the impact of volatile 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 air 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 the reader 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 Statements of Income
(in thousands, except share and per share amounts)
Three months ended
April 30,
------------------------
2009 2008
---- ----
(Unaudited) (Unaudited)
Revenues:
Airfreight forwarding $ 239,288 $ 449,155
Ocean freight forwarding 192,066 293,503
Customs brokerage 19,949 28,145
Contract logistics 142,926 164,803
Distribution 98,500 149,379
Other 75,627 99,465
----------- -----------
Total revenues 768,356 1,184,450
----------- -----------
Purchased transportation costs:
Airfreight forwarding 175,356 361,125
Ocean freight forwarding 152,410 248,665
Customs brokerage 1,118 1,529
Contract logistics 23,391 20,873
Distribution 66,499 105,357
Other 40,075 57,398
Staff costs 175,803 216,692
Depreciation and amortization 9,854 10,189
Amortization of intangible assets 2,637 3,102
Restructuring charges 1,231 6,036
Other operating expenses 102,130 129,814
----------- -----------
Total operating expenses 750,504 1,160,780
----------- -----------
Operating income 17,852 23,670
Interest expense, net (3,453) (4,555)
Other (expense)/income, net (202) 440
----------- -----------
Pretax income 14,197 19,555
Provision for income taxes 4,317 5,421
----------- -----------
Income from continuing operations, net of
tax 9,880 14,134
Discontinued operations, net of tax -- 205
----------- -----------
Net income 9,880 14,339
Net income attributable to noncontrolling
interests (35) (797)
----------- -----------
Net income attributable to UTi Worldwide
Inc. $ 9,845 $ 13,542
=========== ===========
Basic earnings per common share attributable
to UTi Worldwide Inc. common shareholders:
Continuing operations $ 0.10 $ 0.13
Discontinued operations -- --
----------- -----------
$ 0.10 $ 0.13
=========== ===========
Diluted earnings per common share
attributable to UTi Worldwide Inc. common
shareholders:
Continuing operations $ 0.10 $ 0.13
Discontinued operations -- --
----------- -----------
$ 0.10 $ 0.13
=========== ===========
Number of weighted-average common shares
outstanding used for per share calculations:
Basic shares 99,659,276 99,180,213
Diluted shares 100,841,594 100,617,409
Amounts attributable to UTi Worldwide Inc.
common shareholders:
Income from continuing operations, net of
tax $ 9,845 $ 13,321
Discontinued operations, net of tax -- 221
----------- -----------
Net income $ 9,845 $ 13,542
=========== ===========
UTi Worldwide Inc.
Condensed Consolidated Balance Sheets
(in thousands)
April 30, January 31,
2009 2009
----------- -----------
(Unaudited)
ASSETS
Cash and cash equivalents $ 260,969 $ 256,869
Trade receivables, net 618,959 645,275
Deferred income taxes 20,484 19,192
Other current assets 94,060 79,869
----------- -----------
Total current assets 994,472 1,001,205
Property, plant and equipment, net 170,015 163,441
Goodwill and other intangible assets, net 457,949 442,691
Investments 2,848 2,940
Deferred income taxes 20,853 23,831
Other non-current assets 16,183 14,578
----------- -----------
Total assets $ 1,662,320 $ 1,648,686
=========== ===========
LIABILITIES & EQUITY
Bank lines of credit $ 66,674 $ 69,978
Short-term borrowings 6,623 6,899
Current portion of long-term borrowings 66,666 66,666
Current portion of capital lease obligations 15,878 15,878
Trade payables and other accrued liabilities 566,825 593,271
Income taxes payable 13,695 10,425
Deferred income taxes 1,455 2,493
----------- -----------
Total current liabilities 737,816 765,610
Long-term borrowings, excluding current
portion 116,289 115,747
Capital lease obligations, excluding current
portion 20,547 20,754
Deferred income taxes 27,942 27,542
Retirement fund obligations 6,648 6,947
Other non-current liabilities 20,742 19,116
Commitments and contingencies
UTi Worldwide Inc. shareholders' equity:
Common stock 453,070 450,553
Retained earnings 348,306 338,461
Accumulated other comprehensive loss (87,774) (112,268)
----------- -----------
Total UTi Worldwide Inc. shareholders'
equity 713,602 676,746
Noncontrolling interests 18,734 16,224
----------- -----------
Total equity 732,336 692,970
----------- -----------
Total liabilities and equity $ 1,662,320 $ 1,648,686
=========== ===========
UTi Worldwide Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three months ended
April 30,
------------------
2009 2008
----------- -----------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES:
Net income $ 9,880 $ 14,339
Adjustments to reconcile net income to net
cash provided by/(used in) operating
activities:
Share-based compensation costs, net 2,471 2,588
Depreciation and amortization 9,854 10,301
Amortization of intangible assets 2,637 3,102
Restructuring charges 1,231 6,036
Deferred income taxes 2,593 (5,247)
Tax (loss)/benefit relating to share-based
compensation (188) 126
Excess tax benefit from share-based
compensation -- (68)
Gain on disposal of property, plant and
equipment (6,635) (198)
Other -- 104
Net changes in operating assets and
liabilities (7,018) (53,009)
----------- -----------
Net cash provided by/(used in) operating
activities 14,825 (21,926)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (7,083) (11,742)
Proceeds from disposal of property, plant
and equipment 9,056 1,269
(Increase)/decrease in other non-current
assets (1,214) 990
Acquisitions and contingent earn-out
payments (1,178) (421)
Other 416 (332)
----------- -----------
Net cash used in investing activities (3) (10,236)
FINANCING ACTIVITIES:
(Decrease)/increase in bank lines of credit (21,510) 18,656
(Decrease)/increase in short-term borrowings (1,018) 262
Proceeds from issuance of long-term
borrowings 1,498 --
Repayment of long-term borrowings (60) (6)
Repayment of capital lease obligations (5,042) (7,758)
Dividends paid to noncontrolling interests (202) (509)
Net proceeds from issuance of ordinary
shares 235 1,660
Excess tax benefit from share-based
compensation -- 68
----------- -----------
Net cash (used in)/provided by financing
activities (26,099) 12,373
Effect of foreign exchange rate changes on
cash and cash equivalents 15,377 1,818
----------- -----------
Net increase/(decrease) in cash and cash
equivalents 4,100 (17,971)
Cash and cash equivalents at beginning of
period 256,869 289,141
----------- -----------
Cash and cash equivalents at end of period $ 260,969 $ 271,170
=========== ===========
UTi Worldwide Inc.
Segment Reporting
(in thousands)
(Unaudited)
Three months ended April 30, 2009
----------------------------------------------
Contract
Logistics
Freight and
Forwarding Distribution Corporate Total
---------- ------------ --------- ---------
Revenues $ 493,590 $ 274,766 $ -- $ 768,356
--------- --------- --------- ---------
Purchased
transportation costs 359,364 99,485 -- 458,849
Staff costs 80,905 91,378 3,520 175,803
Depreciation and
amortization 3,627 6,128 99 9,854
Amortization of
intangible assets 826 1,811 -- 2,637
Restructuring charges -- -- 1,231 1,231
Other operating
expenses 37,865 65,491 (1,226) 102,130
--------- --------- --------- ---------
Total operating
expenses 482,587 264,293 3,624 750,504
--------- --------- --------- ---------
Operating income/
(loss) $ 11,003 $ 10,473 $ (3,624) 17,852
========= ========= =========
Interest expense, net (3,453)
Other expense, net (202)
---------
Pretax income 14,197
Provision for income
taxes 4,317
---------
Net income 9,880
Net income attributable
to noncontrolling
interests (35)
---------
Net income
attributable to UTi
Worldwide Inc. $ 9,845
=========
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 $ 358,257 $ -- $1,184,450
--------- --------- --------- ----------
Purchased
transportation costs 650,524 144,423 -- 794,947
Staff costs 99,171 115,110 2,411 216,692
Depreciation and
amortization 3,812 6,294 83 10,189
Amortization of
intangible assets 845 2,257 -- 3,102
Restructuring charges 2,382 3,654 -- 6,036
Other operating
expenses 41,578 83,278 4,958 129,814
--------- --------- --------- ----------
Total operating
expenses 798,312 355,016 7,452 1,160,780
--------- --------- --------- ----------
Operating income/
(loss) $ 27,881 $ 3,241 $ (7,452) 23,670
========= ========= =========
Interest expense, net (4,555)
Other income, net 440
----------
Pretax income 19,555
Provision for income
taxes 5,421
----------
Income from
continuing
operations, net of
tax 14,134
Discontinued
operations, net of
tax 205
----------
Net income 14,339
Net income
attributable to
noncontrolling
interests (797)
----------
Net income
attributable to UTi
Worldwide Inc. $ 13,542
==========
UTi Worldwide Inc.
Geographic Reporting
(in thousands)
(Unaudited)
Three months ended April 30, 2009
------------------------------------------------
Contract
Contract Logistics
Logistics Freight and
Freight and Forwarding Distribution
Forwarding Distribution Net Net
Revenue Revenue Revenue Revenue
------- ------- ------- -------
EMENA $ 183,832 $ 53,556 $ 50,786 $ 36,887
Americas 106,088 151,945 34,065 85,390
Asia Pacific 145,515 7,309 33,314 5,172
Africa 58,155 61,956 16,061 47,832
Corporate -- -- -- --
---------- ---------- ---------- ----------
Total $ 493,590 $ 274,766 $ 134,226 $ 175,281
========== ========== ========== ===========
Operating Restructuring
Income/(Loss) Charges
------------- -------
EMENA $ (1,329) $ --
Americas 3,127 --
Asia Pacific 8,045 --
Africa 11,633 --
Corporate (3,624) 1,231
---------- ----------
Total $ 17,852 $ 1,231
========== ==========
Three months ended April 30, 2008
------------------------------------------------
Contract
Contract Logistics
Logistics Freight and
Freight and Forwarding Distribution
Forwarding Distribution Net Net
Revenue Revenue Revenue Revenue
------- ------- ------- -------
EMENA $ 282,233 $ 67,881 $ 69,626 $ 40,389
Americas 159,790 209,247 41,522 115,422
Asia Pacific 288,748 7,652 41,661 5,134
Africa 95,422 73,477 22,860 52,889
Corporate -- -- -- --
---------- ---------- ---------- ----------
Total $ 826,193 $ 358,257 $ 175,669 $ 213,834
========== ========== ========== ==========
Operating Restructuring
Income/(Loss) Charges
------------- -------
EMENA $ 5,524 $ 1,572
Americas 5,886 3,737
Asia Pacific 10,283 240
Africa 9,429 487
Corporate (7,452) --
---------- ----------
Total $ 23,670 $ 6,036
========== ==========
UTi Worldwide Inc.
Revenue Growth Reconciliation
(in thousands)
(Unaudited)
Set forth below is a reconciliation of our organic growth in our
revenues and net revenues over the corresponding prior-year period.
REVENUES NET REVENUES
-------- ------------
Three months ended April 30,
2008 $1,184,450 $ 389,503
Add: Acquisitions impact(1) 7,234 4,378
Less: Dispositions impact(2) (14,797) (14,425)
Less: Currency impact(3) (103,728) (44,658)
Organic growth (304,803) (26)% (25,291) (6)%
---------- ===== ---------- =====
Three months ended April 30,
2009 $ 768,356 $ 309,507
========== ==========
(1) Relates to revenues in the current period for businesses acquired
from May 2008.
(2) Relates to revenues in the corresponding prior period for
businesses exited through the Company's previously announced cost
reduction plans.
(3) Represents the fluctuations in foreign currency exchange rates
when balances are translated into U.S. dollars.