NEW YORK (TheStreet) -- UTi Worldwide (UTIW - Get Report) was plunging 23.95% to $11.60 Wednesday after the global supply chain management solutions company announced a refinancing plan and issued guidance well below analysts' expectations.
The company announced it had breached some debt covenants and would need to raise approximately $525 million to pay off a minimum debt of $400 million that could come due in April. UTi said it would issue $350 million in senior notes due 2019 in a private offering. and also plans to raise $175 million through the issuing of convertible preferred shares to its largest shareholder, P2 Capital Partners. This would raise P2's stake in the company to 18.1% from 10.76%, according to Thomson Reuters.
Furthermore, UTi forecast a loss of 33 to 38 cents a share and revenue of $1.05 billion to $1.1 billion for the fourth quarter ended Jan. 31. Analysts expected a profit of 6 cents a share on revenue of $1.13 billion, according to Thomson Reuters.
TheStreet Ratings team rates UTI WORLDWIDE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate UTI WORLDWIDE INC (UTIW) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to -$22.20 million or 48.49% when compared to the same quarter last year. In addition, UTI WORLDWIDE INC has also vastly surpassed the industry average cash flow growth rate of -79.65%.
- UTIW, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Air Freight & Logistics industry and the overall market, UTI WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for UTI WORLDWIDE INC is currently lower than what is desirable, coming in at 34.09%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.78% trails that of the industry average.
- You can view the full analysis from the report here: UTIW Ratings Report