September 04, 2014: UTi Worldwide has reported financial results for its fiscal 2015 second quarter ended July 31, 2014.
- Revenues were $1,091.2 million, a decrease of 3.4 percent from $1,129.4 million.
- Net revenues (revenues minus purchased transportation costs) were $401.2 million, an increase of 4.0 percent from $385.6 million.
- On an organic basis, revenues decreased 2.7 percent and net revenues increased 5.5 percent versus the comparable prior year period.
- Net loss attributable to UTi Worldwide Inc. was $16.9 million in the fiscal 2015 second quarter. Net loss attributable to common shareholders after dividends on preferred stock was $0.19 per diluted common share.
- Net loss attributable to UTi Worldwide Inc. in the fiscal 2014 second quarter was $4.4 million, or $0.04 per diluted common share.
- The company recorded severance and other costs of $1.6 million compared to $3.2 million. In addition, UTi recorded additional tax expense exceeding its normalized tax rate of $11.2 million, or $0.11 per diluted common share.
- Excluding severance and other costs and the additional tax expense described above, non-GAAP net loss attributable to UTi Worldwide Inc. was $4.2 million. Non-GAAP net loss attributable to common shareholders after preferred stock dividends was $0.07 per diluted common share.
- Earnings before interest, taxes, depreciation and amortization, as adjusted for severance and other costs (adjusted EBITDA1) totaled $30.0 million compared to $29.0 million.
- All references to adjusted items, free cash flow (defined as cash flow from operations less net capital expenditures) and organic items in this release refer to non-GAAP results. A reconciliation of GAAP to these non-GAAP results is provided in the supplemental financial information attached to this release.
Eric W. Kirchner, chief executive officer, said, "We recorded solid progress in the second quarter with net revenues, adjusted EBITDA and free cash flow all improving on a year-over-year basis. On a constant-currency basis, our overall net revenue rose 5.5 percent in the second quarter compared to the same period last year. This was primarily due to a significant increase in business activity in contract logistics and distribution, particularly in our Americas and EMENA regions. Net revenue in freight forwarding was slightly higher in the second quarter on a year-over-year basis.
"Adjusted EBITDA increased nearly nine percent on a constant-currency basis, despite $10.2 million of temporary costs related to the transformation. Our contract logistics and distribution segment had an excellent quarter, with adjusted EBITDA reflecting the improvements we have been making in this business over the past two years. Adjusted EBITDA in freight forwarding was negatively impacted by temporary costs, as expected. Transformation-related cost reductions continued at an annualized pace of approximately $50 million through the end of the second quarter. We remain on track to achieve $95 million in annualized cost savings by the end of fiscal 2015. As a result, we are targeting EBITDA in fiscal 2016 in the range of $190 million to $210 million, with results improving throughout the year."
Kirchner continued, "The rollout of our 1View freight forwarding operating system is substantially complete, and the system is performing as expected. In the past year we have more than doubled the number of countries deployed on our 1View and Oracle platforms, and today virtually all freight forwarding transactions are processed through the new systems. As a result, we have turned our focus away from system implementations toward making the best use of our new capabilities to win business and improve operational effectiveness."
Operating expenses less purchased transportation costs were $394.2 million in the second quarter of fiscal 2015. Excluding severance and other costs, adjusted operating expenses less purchased transportation costs were $392.5 million, compared to $372.4 million in the same period last year.
The company recorded a tax provision of $10.3 million in the fiscal 2015 second quarter on a pretax loss of $3.9 million, due to increases in valuation allowances and the mix of taxable income across the company's tax jurisdictions.
Free cash flow was negative $10.4 million in the fiscal 2015 second quarter, compared to negative $22.8 million in the same quarter last year. During the fiscal 2015 second quarter, trade receivables declined $37.5 million (excluding the effects of currency), as a result of increased collections and a significant reduction in work-in-process.
Richard G. Rodick, chief financial officer, said, "We made significant progress in reducing our accounts receivable balance in the fiscal 2015 second quarter. As a result, the fiscal 2015 second quarter was our best free cash flow period in six quarters, and better than any second quarter in three years. We continue to expect increased collection of trade receivables and a reduction in work-in-process for the remainder of fiscal 2015. Based on these assumptions, we continue to target positive free cash flow for the full fiscal year."