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UTi Worldwide Reports Fiscal 2014 Second Quarter Results

Stocks in this article: UTIW

(Tables Follow)

UTi Worldwide Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
         
  Three months ended Six months ended
  July 31, July 31,
  2013 2012 2013 2012
  (Unaudited) (Unaudited)
         
Revenues:        
Airfreight forwarding  $ 355,120  $ 370,394  $ 678,949  $ 751,534
Ocean freight forwarding  318,687  332,041  622,465  637,122
Customs brokerage  32,308  30,414  62,126  58,680
Contract logistics  186,377  203,818  367,059  405,471
Distribution   145,246  146,514  292,956  295,402
Other  91,680  99,749  186,516  203,378
Total revenues  1,129,418  1,182,930  2,210,071  2,351,587
         
Other operating expenses:        
Purchased transportation costs:        
Airfreight forwarding  274,926  286,684  525,398  588,506
Ocean freight forwarding  265,348  280,352  522,323  535,231
Customs brokerage  4,032  1,336  5,374  2,779
Contract logistics  45,956  54,370  90,414  104,353
Distribution   103,004  102,225  204,212  199,232
Other  50,504  51,892  100,967  109,648
         
Staff costs  224,280  225,330  444,492  456,518
Depreciation  12,956  11,229  26,138  22,725
Amortization of intangible assets  2,754  3,160  5,546  6,402
Severance and other  3,180  2,124  5,849  3,824
Other operating expenses  132,403  131,198  265,306  265,799
Total other operating expenses  1,119,343  1,149,900  2,196,019  2,295,017
Operating income  10,075  33,030  14,052  56,570
Interest expense, net  (3,447)  (2,494)  (6,740)  (5,302)
Other expense, net  (720)  (272)  (962)  (300)
Pretax income  5,908  30,264  6,350  50,968
Provision for income taxes  9,414  10,047  20,720  16,521
Net (loss)/income  (3,506)  20,217  (14,370)  34,447
Net income attributable to non-controlling interests  938  1,334  2,492  2,678
         
Net (loss)/income attributable to UTi Worldwide Inc.  $ (4,444)  $ 18,883  $ (16,862)  $ 31,769
         
Basic (loss)/earnings per common share attributable to UTi Worldwide Inc. common shareholders  $ (0.04)  $ 0.18  $ (0.16)  $ 0.31
         
Diluted (loss)/earnings per common share attributable to UTi Worldwide Inc. common shareholders  $ (0.04)  $ 0.18  $ (0.16)  $ 0.31
         
Number of weighted average common shares outstanding used for per share calculations        
Basic shares  104,608,931  103,609,889  104,310,510  103,323,012
Diluted shares  104,608,931  103,893,040  104,310,510  103,920,826
 
 
UTi Worldwide Inc.
Condensed Consolidated Balance Sheets
(in thousands)
     
  July 31, 2013 January 31, 2013
  (Unaudited)
     
ASSETS    
Cash and cash equivalents  $ 178,125  $ 237,276
Trade receivables, net  1,012,598  898,809
Deferred income taxes  15,854  19,595
Other current assets  158,390  156,385
Total current assets  1,364,967  1,312,065
     
Property, plant and equipment, net  238,749  242,898
Goodwill and other intangible assets, net  462,674  457,635
Investments  1,057  969
Deferred income taxes  20,916  25,802
Other non-current assets  36,520  34,688
Total assets  $ 2,124,883  $ 2,074,057
     
LIABILITIES & EQUITY    
Bank lines of credit  $ 133,738  $ 79,213
Short-term borrowings  1,514  1,129
Current portion of long-term borrowings  2,417  5,663
Current portion of capital lease obligations  11,448  11,377
Trade payables and other accrued liabilities  835,251  786,444
Income taxes payable  9,822  8,470
Deferred income taxes  1,946  2,775
Total current liabilities  996,136  895,071
     
Long-term borrowings, excluding current portion  203,630  204,434
Capital lease obligations, excluding current portion  65,218  73,538
Deferred income taxes  30,238  29,654
Other non-current liabilities  44,290  47,178
     
Commitments and contingencies    
     
UTi Worldwide Inc. shareholders' equity:    
Common stock  510,934  505,237
Retained earnings  373,802  396,946
Accumulated other comprehensive loss  (112,949)  (92,348)
Total UTi Worldwide Inc. shareholders' equity  771,787  809,835
Non-controlling interests  13,584  14,347
Total equity  785,371  824,182
Total liabilities and equity  $ 2,124,883  $ 2,074,057
 
 
UTi Worldwide Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
     
  Six months ended July 31,
  2013 2012
  (Unaudited)
     
OPERATING ACTIVITIES:    
Net (loss)/income  $ (14,370)  $ 34,447
Adjustments to reconcile net (loss)/income to net cash used in operating activities:    
Share-based compensation costs  6,869  7,050
Depreciation  26,138  22,725
Amortization of intangible assets  5,546  6,402
Amortization of debt issuance costs  346  658
Deferred income taxes  4,516  3,274
Uncertain tax positions  (148)  (250)
Excess tax benefits from share-based compensation  (73)  (132)
(Gain)/loss on disposal of property, plant and equipment  (696)  37
Provision for doubtful accounts  2,814  449
Other  2,859  1,146
Net changes in operating assets and liabilities  (80,464)  (90,180)
Net cash used in operating activities  (46,663)  (14,374)
     
INVESTING ACTIVITIES:    
Purchases of property, plant and equipment, excluding software  (26,332)  (19,561)
Proceeds from disposals of property, plant and equipment  1,884  2,332
Purchases of software and other intangible assets  (18,387)  (15,576)
Net increase in other non-current assets  (2,869)  (1,016)
Other  (99)  116
Net cash used in investing activities  (45,803)  (33,705)
     
FINANCING ACTIVITIES:    
Net borrowings under bank lines of credit  59,687  29,677
Net increase in short-term borrowings  441  -- 
Proceeds from issuances of long-term borrowings  550  1,986
Repayments of long-term borrowings  (4,617)  (11,045)
Debt issuance costs  --   (1,098)
Repayments of capital lease obligations  (7,882)  (9,759)
Distributions to non-controlling interests and other  (2,152)  (2,433)
Ordinary shares settled under share-based compensation plans  (2,487)  (2,450)
Proceeds from issuance of ordinary shares  2,461  1,592
Excess tax benefits from share-based compensation  73  132
Dividends paid  --   (6,223)
Net cash provided by financing activities  46,074  379
     
Effect of foreign exchange rate changes on cash and cash equivalents  (12,759)  (11,300)
Net decrease in cash and cash equivalents  (59,151)  (59,000)
     
Cash and cash equivalents at beginning of period  237,276  321,761
     
Cash and cash equivalents at end of period  $ 178,125  $ 262,761
 
 
UTi Worldwide Inc.
Segment Reporting        
(in thousands)        
(Unaudited)        
  Three months ended July 31, 2013
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 768,803  $ 360,615  $ --   $ 1,129,418
         
Purchased transportation costs  585,374  158,396  --   743,770
Staff costs  108,803  105,140  10,337  224,280
Depreciation  3,939  7,566  1,451  12,956
Amortization of intangible assets  1,121  1,207  426  2,754
Severance and other  2,193  317  670  3,180
Other operating expenses  46,531  78,148  7,724  132,403
Total operating expenses  747,961  350,774  20,608  1,119,343
Operating income/(loss)  $ 20,842  $ 9,841  $ (20,608)  10,075
Interest expense, net        (3,447)
Other expense, net        (720)
Pretax income        5,908
Provision for income taxes        9,414
Net loss        (3,506)
Net income attributable to non-controlling interests        938
Net loss attributable to UTi Worldwide Inc.        $ (4,444)
         
         
UTi Worldwide Inc.        
Segment Reporting        
(in thousands)        
(Unaudited)        
         
  Three months ended July 31, 2012
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 797,375  $ 385,555  $ --   $ 1,182,930
         
Purchased transportation costs  610,646  166,213  --   776,859
Staff costs  107,602  108,863  8,865  225,330
Depreciation  4,043  6,647  539  11,229
Amortization of intangible assets  1,017  1,603  540  3,160
Severance and other  1,509  283  332  2,124
Other operating expenses  44,421  82,292  4,485  131,198
Total operating expenses  769,238  365,901  14,761  1,149,900
Operating income/(loss)  $ 28,137  $ 19,654  $ (14,761)  33,030
Interest expense, net        (2,494)
Other expense, net        (272)
Pretax income        30,264
Provision for income taxes        10,047
Net income        20,217
Net income attributable to non-controlling interests        1,334
Net income attributable to UTi Worldwide Inc.        $ 18,883
         
         
UTi Worldwide Inc.        
Segment Reporting        
(in thousands)        
(Unaudited)        
         
  Six months ended July 31, 2013
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 1,488,319  $ 721,752  $ --   $ 2,210,071
         
Purchased transportation costs  1,135,337  313,351  --   1,448,688
Staff costs  213,871  211,417  19,204  444,492
Depreciation  8,222  15,362  2,554  26,138
Amortization of intangible assets  2,241  2,443  862  5,546
Severance and other  2,429  1,309  2,111  5,849
Other operating expenses  92,579  157,720  15,007  265,306
Total operating expenses  1,454,679  701,602  39,738  2,196,019
Operating income/(loss)  $ 33,640  $ 20,150  $ (39,738)  14,052
Interest expense, net        (6,740)
Other expense, net        (962)
Pretax income        6,350
Provision for income taxes        20,720
Net loss        (14,370)
Net income attributable to non-controlling interests        2,492
Net loss attributable to UTi Worldwide Inc.        $ (16,862)
         
         
UTi Worldwide Inc.        
Segment Reporting        
(in thousands)        
(Unaudited)        
         
  Six months ended July 31, 2012
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 1,579,297  $ 772,290  $ --   $ 2,351,587
         
Purchased transportation costs  1,216,254  323,495  --   1,539,749
Staff costs  214,034  224,692  17,792  456,518
Depreciation  8,250  13,400  1,075  22,725
Amortization of intangible assets  2,071  3,251  1,080  6,402
Severance and other  2,176  1,109  539  3,824
Other operating expenses  91,025  166,035  8,739  265,799
Total operating expenses  1,533,810  731,982  29,225  2,295,017
Operating income/(loss)  $ 45,487  $ 40,308  $ (29,225)  56,570
Interest expense, net        (5,302)
Other expense, net        (300)
Pretax income        50,968
Provision for income taxes        16,521
Net income        34,447
Net income attributable to non-controlling interests        2,678
Net income attributable to UTi Worldwide Inc.        $ 31,769
 
 
UTi Worldwide Inc.
Geographic Reporting
(in thousands)
(Unaudited)
 
  Three months ended July 31, 2013
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating (Loss)/Income Severance and Other
EMENA  $ 215,932  $ 55,598  $ 59,805  $ 32,661  $ (246)  $ 932
Americas  181,118  198,677  48,185  88,131  3,769  652
Asia Pacific  263,749  20,964  51,336  13,708  14,457  604
Africa  108,004  85,376  24,103  67,719  12,703  322
Corporate  --   --   --   --   (20,608)  670
Total  $ 768,803  $ 360,615  $ 183,429  $ 202,219  $ 10,075  $ 3,180
             
             
  Three months ended July 31, 2012
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating Income/(Loss) Severance and Other
EMENA  $ 236,506  $ 60,048  $ 61,021  $ 33,524  $ 2,470  $ 1,199
Americas  195,208  205,008  48,648  90,263  9,809  499
Asia Pacific  251,389  18,533  49,197  12,008  13,353  50
Africa   114,272  101,966  27,863  83,547  22,159  44
Corporate  --   --   --   --   (14,761)  332
Total  $ 797,375  $ 385,555  $ 186,729  $ 219,342  $ 33,030  $ 2,124
 
 
UTi Worldwide Inc.
Geographic Reporting
(in thousands)
(Unaudited)
 
  Six months ended July 31, 2013
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating (Loss)/Income Severance and Other
EMENA  $ 428,623  $ 109,867  $ 117,023  $ 64,758  $ (3,406)  $ 1,919
Americas  355,539  393,441  92,466  173,865  4,983  893
Asia Pacific  483,268  38,846  95,571  25,481  23,642  604
Africa  220,889  179,598  47,922  144,297  28,571  322
Corporate  --   --   --   --   (39,738)  2,111
Total  $ 1,488,319  $ 721,752  $ 352,982  $ 408,401  $ 14,052  $ 5,849
             
             
  Six months ended July 31, 2012
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating Income/(Loss) Severance and Other
EMENA  $ 480,851  $ 123,036  $ 119,185  $ 71,677  $ 1,930  $ 2,229
Americas  381,873  401,731  95,031  178,874  16,269  924
Asia Pacific  484,627  35,508  95,736  23,154  24,158  75
Africa   231,946  212,015  53,091  175,090  43,438  57
Corporate  --   --   --   --   (29,225)  539
Total  $ 1,579,297  $ 772,290  $ 363,043  $ 448,795  $ 56,570  $ 3,824
 
 
UTi Worldwide Inc. 
Supplemental Financial Information – Reconciliation to US GAAP
(in thousands, except per share amounts)
(Unaudited)    
     
  Three months ended July 31, 2013 Three months ended July 31, 2012
GAAP Revenues  $ 1,129,418  $ 1,182,930
Less: Purchased transportation costs  (743,770)  (776,859)
Net revenues  $ 385,648  $ 406,071
     
GAAP Operating expenses  $ 1,119,343  $ 1,149,900
Less: Purchased transportation costs  (743,770)  (776,859)
Operating expenses less purchased transportation costs  375,573  373,041
Less: Adjustment for severance and other (1)  (3,180)  (2,124)
Non-GAAP Operating expenses  $ 372,393  $ 370,917
     
GAAP Operating income  $ 10,075  $ 33,030
Add: Adjustment for severance and other (1)  3,180  2,124
Non-GAAP Operating income  $ 13,255  $ 35,154
     
Non-GAAP operating income as a percentage of net revenues 3.4% 8.7%
     
GAAP Pretax income  $ 5,908  $ 30,264
Add: Adjustment for severance and other (1)  3,180  2,124
Non-GAAP Pretax income  $ 9,088  $ 32,388
     
GAAP Provision for income taxes  $ 9,414  $ 10,047
Add: Adjustment for severance and other (2)  808  705
Less: Adjustment for deferred tax asset valuation allowance (3)  (7,540)  (786)
Non-GAAP Provision for income taxes  $ 2,682  $ 9,966
     
GAAP Net (loss)/income attributable to UTi Worldwide Inc.  $ (4,444)  $ 18,883
Adjustment for:    
Severance and other (1)  3,180  2,124
Income tax effect severance and other (2)  (808)  (705)
Adjustment for deferred tax asset valuation allowance (3)  7,540  786
Non-GAAP Net income attributable to UTi Worldwide Inc.  $ 5,468  $ 21,088
     
GAAP Diluted (loss)/earnings per common share  $ (0.04)  $ 0.18
Adjustment for:    
Severance and other (1)  0.03  0.03
Income tax effect severance and other (2)  (0.01)  (0.01)
Adjustment for deferred tax asset valuation allowance (3)  0.07  0.01
Non-GAAP Diluted earnings per common share  $ 0.05  $ 0.21
     
(1)  During the three months ended July 31, 2013 and 2012, the company recorded pre-tax severance of $3,180 and $2,124, respectively, primarily related to transformation activities.
(2) The provisions for income tax adjustment related to the severance and other costs were calculated based on the prevailing tax rate in each jurisdiction.
(3) Adjustments for deferred tax asset valuation allowances include the effects of current period valuation allowances. For the three months ended July 31, 2013, the adjustment also includes an out of period adjustment to income tax expense of $1,098 to increase the valuation allowances for certain of its deferred tax assets. 
 
 
UTi Worldwide Inc. 
Supplemental Financial Information – Reconciliation to US GAAP
(in thousands, except per share amounts)
(Unaudited)
     
  Six months ended July 31, 2013 Six months ended July 31, 2012
GAAP Revenues  $ 2,210,071  $ 2,351,587
Less: Purchased transportation costs  (1,448,688)  (1,539,749)
Net revenues  $ 761,383  $ 811,838
     
GAAP Operating expenses  $ 2,196,019  $ 2,295,017
Less: Purchased transportation costs  (1,448,688)  (1,539,749)
Operating expenses less purchased transportation costs  747,331  755,268
Less: Adjustment for severance and other (4)  (5,849)  (3,824)
Non-GAAP Operating expenses  $ 741,482  $ 751,444
     
GAAP Operating income  $ 14,052  $ 56,570
Add: Adjustment for severance and other (4)  5,849  3,824
Non-GAAP Operating income  $ 19,901  $ 60,394
     
Non-GAAP operating income as a percentage of net revenues 2.6% 7.4%
     
GAAP Pretax income  $ 6,350  $ 50,968
Add: Adjustment for severance and other (4)  5,849  3,824
Non-GAAP Pretax income  $ 12,199  $ 54,792
     
GAAP Provision for income taxes  $ 20,720  $ 16,521
Add: Adjustment for severance and other (5)  1,723  1,240
Less: Adjustment for deferred tax asset valuation allowance (6)  (15,848)  (2,082)
Non-GAAP Provision for income taxes  $ 6,595  $ 15,679
     
GAAP Net (loss)/income attributable to UTi Worldwide Inc.  $ (16,862)  $ 31,769
Adjustment for:    
Severance and other (4)  5,849  3,824
Income tax effect severance and other (5)  (1,723)  (1,240)
Adjustment for deferred tax asset valuation allowance (6)  15,848  2,082
Non-GAAP Net income attributable to UTi Worldwide Inc.  $ 3,112  $ 36,435
     
GAAP Diluted (loss)/earnings per common share  $ (0.16)  $ 0.31
Adjustment for:    
Severance and other (4)  0.06  0.03
Income tax effect severance and other (5)  (0.02)  (0.01)
Adjustment for deferred tax asset valuation allowance (6)  0.15  0.02
Non-GAAP Diluted earnings per common share  $ 0.03  $ 0.35
     
(4) During the six months ended July 31, 2013 and 2012, the company recorded pre-tax severance of $5,849 and $3,824, respectively, primarily related to transformation activities.
(5) The provisions for income tax adjustment related to the severance and other costs were calculated based on the prevailing tax rate in each jurisdiction.
(6) Adjustments for deferred tax asset valuation allowances include the effects of current period valuation allowances.   For the six months ended July 31, 2013, the adjustment also includes an out of period adjustment to income tax expense of $6,098 to increase the valuation allowances for certain of its deferred tax assets.
 
 
UTi Worldwide Inc.
Organic Growth Reconciliation
 (Unaudited)
           
  Three months ended July 31, 2013
  Total Net Change +/(-) Currency Impact Organic Growth +/(-) Non-GAAP Items Adjusted Organic Growth
Revenues  (5)%  3%  (2)%  --%   (2)%
Net revenues  (5)%  3%  (2)%  --%   (2)%
Operating expenses less purchased transportation costs  1%  3%  4%  --%   4%
           
  Six months ended July 31, 2013
  Total Net Change +/(-) Currency Impact Organic Growth +/(-) Non-GAAP Items Adjusted Organic Growth
Revenues  (6)%  1%  (5)%  --%   (5)%
Net revenues  (7)%  2%  (5)%  --%   (5)%
Operating expenses less purchased transportation costs  (1)%  4%  3%  --%   3%

Set forth above is a reconciliation of the company's organic growth rates and the growth rates based on the company's GAAP reported results in the company's revenues, net revenues and operating expenses less purchased transportation costs for the three and six months ended July 31, 2013. Organic growth is a non-GAAP measure that excludes the impact of foreign currency translation.

CONTACT: Jeff Misakian
         Global Vice President, Investor Relations
         (562) 552-9417
         jmisakian@go2uti.com

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