LONG BEACH, Calif., Dec. 4, 2008 (GLOBE NEWSWIRE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today reported financial results for its fiscal 2009 third quarter ended October 31, 2008.
Fiscal Third Quarter 2009 vs. 2008 Results:
* Revenues increased three percent to $1,210.1 million from $1,179.7 million. * Net revenues increased five percent to $408.2 million from $388.9 million. * Operating income increased 11 percent to $53.8 million from $48.5 million. * Operating margin (operating income as a percentage of net revenue) improved to 13.2 percent compared to 12.5 percent. * Income from continuing operations was $35.8 million, or $0.36 per diluted share, compared to $34.7 million, or $0.35 per diluted share.
"We are pleased to report growth in both revenues and operating income, as well as operating margin expansion of 70 basis points, reflecting the benefits of our cost reduction plan and our ongoing efforts to improve our operating performance," said Roger I. MacFarlane, chief executive officer. "Freight forwarding volumes deteriorated throughout the quarter, particularly in airfreight, where growth turned negative for the first time in many years. While part of the airfreight weakness was market related, the majority resulted from steps we took to eliminate low yielding business, consistent with our more disciplined approach to net revenue growth. Yields expanded, offsetting the volume decline and demonstrating the flexibility of our forwarding model. We are also very pleased with the performance in our contract logistics and distribution segment, which produced improved operating margins in the quarter. We continued to win new logistics business and our surface distribution operations performed exceptionally well, though revenue gains in the quarter were offset by businesses that were shed through our previously announced cost reduction plan. We believe the solid performance delivered by our contract logistics and distribution segment reinforces the value of our CLIENTasONE strategy."
The increase in revenues was primarily due to organic growth in Europe. Acquisitions contributed to growth in revenues, but this was more than offset by the exiting of businesses through the company's cost reduction plan and by the impact of the strengthening U.S. dollar.
Operating expenses in the third quarter of fiscal 2009, excluding freight consolidation costs, totaled $354.3 million, an increase of four percent compared to the same period last year. The increase primarily reflects costs to support the company's overall growth, as well as costs attributable to acquisitions, offset by benefits realized through the cost reduction plan.
Other income in the fiscal 2009 third quarter totaled $1.0 million, compared to $3.2 million in the same period last year. Other income in last year's third quarter included a benefit of $2.5 million resulting from the merger that was part of the Israeli acquisition in fiscal 2008.
The company sold the remainder of its art packing business during the third quarter of fiscal 2009. The sale resulted in a gain of $2.1 million, or $0.02 per diluted share, in the fiscal 2009 third quarter, which was reported as discontinued operations in the company's condensed consolidated statements of income. The majority of the art packing business was sold in the fiscal 2009 second quarter as part of the company's ongoing focus on its core businesses.
Net income was $37.9 million, or $0.38 per diluted share, in the fiscal 2009 third quarter, compared to $34.9 million, or $0.35 per diluted share, in the same period last year.
Segment Results:
Freight Forwarding revenues (including customs brokerage) in the fiscal 2009 third quarter grew four percent, while net revenues grew 15 percent compared to the same period last year. Revenue growth was impacted by the deceleration in freight volumes, which was more than offset by improving yields. Airfreight volumes declined 14 percent in the fiscal 2009 third quarter compared to the same period last year, primarily due to the elimination of low yielding business, and to a lesser extent to overall market conditions. Ocean freight volumes increased three percent in the fiscal 2009 third quarter compared to the same period last year. Despite the lack of a peak season, operating income in Freight Forwarding in the fiscal 2009 third quarter improved 11 percent, compared to the same period last year. The operating margin in Freight Forwarding was 23.0 percent in the fiscal 2009 third quarter, compared to 23.8 percent in the third quarter last year.
Contract Logistics and Distribution net revenues declined two percent in the fiscal 2009 third quarter, compared to the same period last year. This was primarily due to the shedding of businesses in the cost reduction plan as well as the loss earlier this year of the Baytown, Texas facility with Wal Mart. The operating margin in Contract Logistics and Distribution improved in the fiscal 2009 third quarter to 7.5 percent, compared to 6.5 percent in the same period last year, reflecting the impact of the cost reduction plan and the company's efforts to improve its operating performance.
MacFarlane concluded, "Looking forward, it is difficult to predict the extent to which weakening global economies will impact international trade. We believe our cost reduction plan and reorganization have put us on the right footing; we will continue to manage and build client relationships, keep a tight lid on costs and manage those areas we can control. We have been through difficult environments before and I am confident we will successfully manage through this downturn as well."
Investor Conference Call:
UTi management will host an investor conference call today, December 4, 2008, at 8:00 a.m. PST (11:00 a.m. EST) to review the company's financials and operations for the fiscal 2009 third 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 74605857. 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 11, 2008, by calling 800-642-1687 (domestic) or 706-645-9291 (international) and using replay passcode 74605857.
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.
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, 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 economic conditions that are adversely affecting trade volumes; the company's clients' demand for its services; the impact of cost reduction measures recently undertaken by the company; 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 Nine months ended October 31, October 31, ------------------------ ------------------------ 2008 2007 2008 2007 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: Airfreight forwarding $ 428,521 $ 439,471 $ 1,334,035 $ 1,118,606 Ocean freight forwarding 326,994 299,580 954,453 796,994 Customs brokerage 28,275 25,128 86,932 70,875 Contract logistics 172,913 164,335 515,126 466,232 Distribution 151,418 158,389 457,124 454,435 Other 101,986 92,774 301,974 256,937 ----------- ----------- ----------- ----------- Total revenues 1,210,107 1,179,677 3,649,644 3,164,079 ----------- ----------- ----------- ----------- Operating expenses: Freight consolidation costs: Airfreight forwarding 342,076 355,096 1,061,563 886,071 Ocean freight forwarding 270,989 253,636 799,433 671,300 Customs brokerage 1,302 901 4,857 2,392 Contract logistics 24,309 22,990 70,144 65,407 Distribution 107,688 103,019 327,761 297,649 Other 55,581 55,161 172,240 153,237 Staff costs 211,881 205,698 651,304 584,496 Depreciation and amortization 10,727 9,973 31,932 29,027 Amortization of intangible assets 3,458 2,051 9,639 6,089 Restructuring and impairments -- -- 6,036 -- Other operating expenses 128,252 122,614 393,610 345,522 ----------- ----------- ----------- ----------- Total operating expenses 1,156,263 1,131,139 3,528,519 3,041,190 ----------- ----------- ----------- ----------- Operating income 53,844 48,538 121,125 122,889 Interest expense, net (4,091) (3,924) (12,689) (11,753) Other income 1,047 3,224 1,680 2,690 ----------- ----------- ----------- ----------- Pretax income 50,800 47,838 110,116 113,826 Provision for income taxes 14,237 12,284 29,692 31,087 ----------- ----------- ----------- ----------- Income before minority interests 36,563 35,554 80,424 82,739 Minority interests (770) (807) (2,803) (2,539) ----------- ----------- ----------- ----------- Income from continuing operations 35,793 34,747 77,621 80,200 Discontinued operations: Operating income, net of tax -- 138 144 472 Gain on sale, net of tax 2,088 -- 7,404 -- ----------- ----------- ----------- ----------- Net income $ 37,881 $ 34,885 $ 85,169 $ 80,672 =========== =========== =========== =========== Basic earnings per share: Continuing operations $ 0.36 $ 0.35 $ 0.78 $ 0.81 Discontinued operations 0.02 -- 0.08 -- ----------- ----------- ----------- ----------- $ 0.38 $ 0.35 $ 0.86 $ 0.81 Diluted earnings per share: Continuing operations $ 0.36 $ 0.35 $ 0.77 $ 0.80 Discontinued operations 0.02 -- 0.07 -- ----------- ----------- ----------- ----------- $ 0.38 $ 0.35 $ 0.84 $ 0.80 Number of weighted- average shares outstanding used for per share calculations: Basic shares 99,511,519 99,274,975 99,342,654 99,017,693 Diluted shares 100,892,907 100,347,982 100,935,780 100,223,934 UTi Worldwide Inc. Condensed Consolidated Balance Sheets (in thousands) October 31, January 31, 2008 2008 ---------- ---------- (Unaudited) ASSETS Cash and cash equivalents $ 247,606 $ 289,141 Trade receivables, net 841,525 865,019 Deferred income tax assets 19,345 18,768 Other current assets 88,031 79,207 ---------- ---------- Total current assets 1,196,507 1,252,135 Property, plant and equipment, net 163,493 154,123 Goodwill and other intangible assets, net 564,865 617,861 Investments 3,108 2,765 Deferred income tax assets 16,597 17,311 Other non-current assets 16,108 30,481 ---------- ---------- Total assets $1,960,678 $2,074,676 ========== ========== LIABILITIES & SHAREHOLDERS' EQUITY Bank lines of credit $ 103,695 $ 113,199 Short-term borrowings 5,749 5,913 Current portion of long-term borrowings 66,667 33,333 Current portion of capital lease obligations 16,643 21,701 Trade payables and other accrued liabilities 720,989 817,058 Income taxes payable 14,940 12,622 Deferred income tax liabilities 4,335 5,030 ---------- ---------- Total current liabilities 933,018 1,008,856 Long-term borrowings 149,574 178,047 Capital lease obligations 21,668 30,612 Deferred income tax liabilities 39,016 38,063 Retirement fund obligations 4,581 4,287 Other non-current liabilities 17,489 19,322 Minority interests 18,409 21,289 Commitments and contingencies Shareholders' equity: Common stock 448,203 435,355 Retained earnings 428,264 349,237 Accumulated other comprehensive loss (99,544) (10,392) ---------- ---------- Total shareholders' equity 776,923 774,200 ---------- ---------- Total liabilities and shareholders' equity $1,960,678 $2,074,676 ========== ========== UTi Worldwide Inc. Condensed Consolidated Statements of Cash Flows (in thousands) Nine months ended October 31, ---------- 2008 2007 ---------- ---------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net income $ 85,169 $ 80,672 Adjustments to reconcile net income to net cash provided by operating activities: Share-based compensation costs, net 8,107 6,872 Depreciation and amortization 32,157 29,304 Amortization of intangible assets 9,639 6,089 Deferred income taxes 96 (329) Uncertain tax positions (1,918) -- Gain on sale of subsidiary (7,404) -- Tax benefit relating to exercise of stock options 868 1,211 Excess tax benefits from share-based compensation (464) (402) Gain on disposal of property, plant and equipment (1,050) (20) Minority interest and other 3,560 195 Changes in operating assets and liabilities (55,952) (86,136) ---------- ---------- Net cash provided by operating activities 72,808 37,456 INVESTING ACTIVITIES: Purchases of property, plant and equipment (39,365) (23,720) Proceeds from disposal of property, plant and equipment 2,453 2,049 Proceeds from sale of subsidiary 11,995 -- Decrease/(increase) in other non-current assets 4,721 (3,655) Acquisitions and contingent earn-out payments (30,736) (66,410) Other (3,735) (922) ---------- ---------- Net cash used in investing activities (54,667) (92,658) FINANCING ACTIVITIES: Increase in bank lines of credit 5,378 15,285 Increase/(decrease) in short-term borrowings 198 (1,700) Repayment of long-term borrowings (307) (484) Repayment of capital lease obligations (18,953) (15,517) Dividends paid to minority interests (567) -- Net proceeds from the issuance of ordinary shares 4,422 4,746 Excess tax benefits from share-based compensation 464 402 Dividends paid (6,141) (5,926) ---------- ---------- Net cash used in financing activities (15,506) (3,194) Effect of foreign exchange rate changes on cash and cash equivalents (44,170) 18,377 ---------- ---------- Net decrease in cash and cash equivalents (41,535) (40,019) Cash and cash equivalents at beginning of period 289,141 278,408 ---------- ---------- Cash and cash equivalents at end of period $ 247,606 $ 238,389 ========== ========== The condensed consolidated statements of cash flows include the activities of discontinued operations. UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited) Three months ended October 31, 2008 ------------------------------------------------- Contract Logistics Freight and Forwarding Distribution Corporate Total --------- --------- --------- ---------- Revenues $ 844,813 $ 365,294 $ -- $1,210,107 --------- --------- --------- ---------- Freight consolidation costs 653,918 148,027 -- 801,945 Staff costs 99,101 110,149 2,631 211,881 Depreciation and amortization 4,213 6,470 44 10,727 Amortization of intangible assets 1,316 2,142 -- 3,458 Other operating expenses 42,424 82,235 3,593 128,252 --------- --------- --------- ---------- Total operating expenses 800,972 349,023 6,268 1,156,263 --------- --------- --------- ---------- Operating income/(loss) $ 43,841 $ 16,271 $ (6,268) 53,844 ========= ========= ========= Interest expense, net (4,091) Other income 1,047 ---------- Pretax income 50,800 Provision for income taxes 14,237 ---------- Income before minority interests 36,563 Minority interests (770) ---------- Income from continuing operations 35,793 Discontinued operations: Operating income, net of tax -- Gain on sale, net of tax 2,088 ---------- Net income $ 37,881 ========== UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited) Three months ended October 31, 2007 ------------------------------------------------- Contract Logistics Freight and Forwarding Distribution Corporate Total --------- --------- --------- ---------- Revenues $ 812,141 $ 367,536 $ -- $1,179,677 --------- --------- --------- ---------- Freight consolidation costs 645,666 145,137 -- 790,803 Staff costs 84,655 118,169 2,874 205,698 Depreciation and amortization 3,506 6,387 80 9,973 Amortization of intangible assets -- 2,051 -- 2,051 Other operating expenses 38,775 81,300 2,539 122,614 --------- --------- --------- ---------- Total operating expenses 772,602 353,044 5,493 1,131,139 --------- --------- --------- ---------- Operating income/(loss) $ 39,539 $ 14,492 $ (5,493) 48,538 ========= ========= ========= Interest expense, net (3,924) Other income 3,224 ---------- Pretax income 47,838 Provision for income taxes 12,284 ---------- Income before minority interests 35,554 Minority interests (807) ---------- Income from continuing operations 34,747 Discontinued operations: Operating income, net of tax 138 Gain on sale, net of tax -- ---------- Net income $ 34,885 ========== UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited) Nine months ended October 31, 2008 ------------------------------------------------- Contract Logistics Freight and Forwarding Distribution Corporate Total ---------- ---------- ---------- ---------- Revenues $2,547,142 $1,102,502 $ -- $3,649,644 ---------- ---------- ---------- ---------- Freight consolidation costs 1,986,297 449,701 -- 2,435,998 Staff costs 301,161 342,822 7,321 651,304 Depreciation and amortization 11,928 19,793 211 31,932 Amortization of intangible assets 3,006 6,633 -- 9,639 Restructuring and impairments 2,382 3,654 -- 6,036 Other operating expenses 131,704 248,592 13,314 393,610 ---------- ---------- ---------- ---------- Total operating expenses 2,436,478 1,071,195 20,846 3,528,519 ---------- ---------- ---------- ---------- Operating income/(loss) $ 110,664 $ 31,307 $ (20,846) 121,125 ========== ========== ========== Interest expense, net (12,689) Other income 1,680 ---------- Pretax income 110,116 Provision for income taxes 29,692 ---------- Income before minority interests 80,424 Minority interests (2,803) ---------- Income from continuing operations 77,621 Discontinued operations: Operating income, net of tax 144 Gain on sale, net of tax 7,404 ---------- Net income $ 85,169 ========== UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited) Nine months ended October 31, 2007 ------------------------------------------------- Contract Logistics Freight and Forwarding Distribution Corporate Total ---------- ---------- ---------- ---------- Revenues $2,118,453 $1,045,626 $ -- $3,164,079 ---------- ---------- ---------- ---------- Freight consolidation costs 1,658,257 417,799 -- 2,076,056 Staff costs 243,522 332,048 8,926 584,496 Depreciation and amortization 9,950 18,890 187 29,027 Amortization of intangible assets -- 6,089 -- 6,089 Other operating expenses 108,524 229,482 7,516 345,522 ---------- ---------- ---------- ---------- Total operating expenses 2,020,253 1,004,308 16,629 3,041,190 ---------- ---------- ---------- ---------- Operating income/(loss) $ 98,200 $ 41,318 $ (16,629) 122,889 ========== ========== ========== Interest expense, net (11,753) Other income 2,690 ---------- Pretax income 113,826 Provision for income taxes 31,087 ---------- Income before minority interests 82,739 Minority interests (2,539) ---------- Income from continuing operations 80,200 Discontinued operations: Operating income, net of tax 472 Gain on sale, net of tax -- ---------- Net income $ 80,672 ========== UTi Worldwide Inc. Geographic Reporting (in thousands) (Unaudited) Three months ended October 31, 2008 -------------------------------------------------------- Contract Contract Logistics Logistics and and Freight Distri- Freight Distri- Forwarding bution Forwarding bution Net Net Operating Revenue Revenue Revenue Revenue Income -------- -------- -------- -------- -------- EMENA $284,813 $ 62,985 $ 73,542 $ 42,080 $ 10,646 Americas 171,385 214,768 44,609 112,639 19,557 Asia Pacific 289,690 9,723 46,515 6,070 14,882 Africa 98,925 77,818 26,229 56,478 15,027 Corporate -- -- -- -- (6,268) -------- -------- -------- -------- -------- Total $844,813 $365,294 $190,895 $217,267 $ 53,844 ======== ======== ======== ======== ======== Three months ended October 31, 2007 -------------------------------------------------------- Contract Contract Logistics Logistics and and Freight Distri- Freight Distri- Forwarding bution Forwarding bution Net Net Operating Revenue Revenue Revenue Revenue Income -------- -------- -------- -------- -------- EMENA $235,161 $ 60,876 $ 57,074 $ 31,432 $ 10,906 Americas 162,219 218,873 43,862 127,708 16,903 Asia Pacific 319,342 9,112 42,166 6,459 15,343 Africa 95,419 78,675 23,373 56,800 10,879 Corporate -- -- -- -- (5,493) -------- -------- -------- -------- -------- Total $812,141 $367,536 $166,475 $222,399 $ 48,538 ======== ======== ======== ======== ======== UTi Worldwide Inc. Geographic Reporting (in thousands) (Unaudited) Nine months ended October 31, 2008 -------------------------------------------------------- Contract Contract Logistics Logistics and Restruc- and Freight Distri- turing Freight Distri- Forwarding bution and Forwarding bution Net Net Operating Impair- Revenue Revenue Revenue Revenue Income ments ---------- ---------- -------- -------- -------- ------ EMENA $ 878,102 $ 201,390 $223,826 $127,076 $ 30,652 $1,584 Americas 502,930 644,148 129,837 342,897 40,286 3,722 Asia Pacific 870,480 26,516 133,798 17,018 38,683 240 Africa 295,630 230,448 73,384 165,810 32,350 490 Corporate -- -- -- -- (20,846) -- ---------- ---------- -------- -------- -------- ------ Total $2,547,142 $1,102,502 $560,845 $652,801 $121,125 $6,036 ========== ========== ======== ======== ======== ====== Nine months ended October 31, 2007 -------------------------------------------------------- Contract Contract Logistics Logistics and Restruc- and Freight Distri- turing Freight Distri- Forwarding bution and Forwarding bution Net Net Operating Impair- Revenue Revenue Revenue Revenue Income ments ---------- ---------- -------- -------- -------- ------ EMENA $ 616,594 $ 173,512 $155,475 $ 88,747 $ 27,664 $ -- Americas 440,160 630,530 122,485 365,008 46,024 -- Asia Pacific 794,697 23,885 117,101 16,621 35,812 -- Africa 267,002 217,699 65,135 157,451 30,018 -- Corporate -- -- -- -- (16,629) -- ---------- ---------- -------- -------- -------- ------ Total $2,118,453 $1,045,626 $460,196 $627,827 $122,889 $ -- ========== ========== ======== ======== ======== ======