UTi WORLDWIDE INC - FORM 8-K - EX-99.1 - EARNINGS NEWS RELEASE

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8-K - FORM 8-K - UTi WORLDWIDE INC	d263756d8k.htm

Exhibit 99.1

LOGO

Contact:

Jeff Misakian

Global Vice President, Investor Relations

(562) 552-9417

jmisakian@go2uti.com

UTi WORLDWIDE REPORTS FISCAL 2012

THIRD QUARTER RESULTS

Long Beach, Calif., December 1, 2011 – UTi Worldwide Inc. (NASDAQ: UTIW) today reported financial results for its fiscal 2012 third quarter ended October 31, 2011.

Fiscal Third Quarter 2012 vs. 2011 Results:

•

Revenues were $1,264.5 million, an increase of 5.5 percent from $1,198.4 million.

•

Net revenues (revenues minus purchased transportation costs) were $443.4 million, an increase of 9.2 percent from $406.1 million.

•

Net income attributable to UTi Worldwide Inc. was $28.5 million, or $0.28 per diluted share, in the third quarter of fiscal 2012, compared to $26.4 million, or $0.26 per diluted share.

Eric W. Kirchner, chief executive officer, said, “We continued to deliver revenue and operating profit growth in each of our business segments, while we controlled expenses in a slowing environment. Airfreight volumes weakened further in the third quarter, particularly in the month of October. Ocean volumes remained on a course of steady improvement, outperforming the market despite the lack of a peak season. Net revenue per unit of cargo expanded in the third quarter, helping to guide an overall increase in net revenue in freight forwarding. Contract logistics and distribution revenue and profit increased by double-digits in the quarter on the strength of new business wins and operational improvement.

“While our third quarter performance was steady, we currently anticipate that our fourth quarter is likely to be adversely impacted by the strengthening of the U.S. dollar, particularly against the South African rand, slowing in the global economy and the timing of Chinese New Year. We do not see a peak in airfreight this year and many clients are planning for a slower environment. We remain attentive to those items we can directly control. The deployment of our new freight forwarding system is proceeding as planned, while we continue to roll out improved global operating processes.”

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Revenues increased 5.5 percent in the 2012 fiscal third quarter compared to the prior-year third quarter primarily due to greater contract logistics and distribution activity, increased ocean volumes and higher fuel surcharges. These factors were partially offset by lower volumes in airfreight. Net revenues increased 9.2 percent in the third quarter due to higher net revenue per unit of cargo in freight forwarding and the increased contract logistics and distribution activity.

Operating expenses less purchased transportation costs were $395.1 million in the third quarter of fiscal 2012, an increase of 9.1 percent compared to the same period last year. The company recorded severance costs of $1.7 million in the fiscal 2012 third quarter, primarily related to certain transformation initiatives. The company also recorded $1.7 million in severance costs in the same period last year, primarily related to rationalizing certain operations.

Operating income in the fiscal 2012 third quarter was $48.3 million, which represented 10.9 percent of net revenues. This compares to operating income in the year-ago third quarter of $43.9 million, or 10.8 percent of net revenues. The operating income and margin increases primarily reflect the higher net revenue per unit of cargo in freight forwarding and increased activity in contract logistics compared to the same period last year.

Net interest expense of $3.3 million in the fiscal 2012 third quarter was lower than the $4.5 million recorded in the same period last year, primarily due to lower borrowing rates. Other expense was $0.7 million in the fiscal 2012 third quarter compared to other income of $1.2 million in the third quarter last year. Other income or expense primarily reflects foreign currency gains and losses on certain intercompany loans as well as various withholding taxes on the remittance of funds from subsidiary companies.

Investor Conference Call:

UTi management will host an investor conference call today, December 1, 2011, at 8:00 a.m. PST (11:00 a.m. EST) to review the company’s financial results for the fiscal 2012 third quarter. Investment professionals are invited to participate in the live call by dialing 877-941-9205 (domestic) or 480-629-9692 (international) using conference ID 4488406. 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 4, 2011, by calling 800-406-7325 (domestic) or 303-590-3030 (international) and using replay passcode 4488406.

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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 included information in the tables to this press release relating to organic revenue and net revenue growth, which are adjusted to exclude the impact of currency fluctuations and, where applicable, acquisitions between comparable periods. The company also has referred to operating expenses less purchased transportation costs, and included information relating to organic operating expenses less purchased transportation costs, which are adjusted to exclude the impact of currency fluctuations and, where applicable, acquisitions between comparable periods. 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, or superior to, the relevant measures prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the tables at the end of this press release.

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 forward-looking statements may include, but are not limited to, statements about the strengthening of the U.S. dollar, the slowing global economy and the timing of Chinese New Year and their potential impact on the fourth quarter, and other statements not of an historical nature. Many important factors may cause the company’s actual results to differ materially from

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those discussed in any such forward-looking statements, including but not limited to the recent economic and political volatility, particularly in Europe and the Middle East, that has materially impacted trade volumes, transportation capacity and pricing dynamics; the financial condition of various European countries; the financial condition of many of the company’s customers; planned or unplanned consequences of the company’s sales initiatives, procurement initiatives and business transformation efforts; the demand for the company’s services; the impact and related costs associated with reorganization efforts and/or cost reduction measures undertaken by the company; increased competition; the impact of volatile fuel costs and 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; disruptions caused by epidemics, natural disasters, conflicts, wars and terrorism; and the other risks and uncertainties described in “Risk Factors” and “Forward-looking Statements” in the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and described in the company’s other 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.

# # #

(Tables Follow)

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UTi Worldwide Inc.

Condensed Consolidated Statements of Income

(in thousands, except share and per share amounts)


	Three months ended October 31,						Nine months ended October 31,
	2011			2010			2011			2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues:
Airfreight forwarding	$	431,247		$	427,878		$	1,335,948		$	1,215,009
Ocean freight forwarding		325,499			318,898			927,773			895,356
Customs brokerage		31,579			28,993			94,914			81,039
Contract logistics		217,227			187,778			629,051			544,087
Distribution		146,772			127,101			415,866			365,694
Other		112,212			107,756			357,047			303,465

Total revenues		1,264,536			1,198,404			3,760,599			3,404,650

Operating expenses:
Purchased transportation costs:
Airfreight forwarding		335,369			336,958			1,051,426			966,619
Ocean freight forwarding		271,832			269,823			772,685			754,791
Customs brokerage		1,062			1,216			3,822			5,034
Contract logistics		53,668			39,132			151,876			116,418
Distribution		100,413			86,275			283,663			249,313
Other		58,817			58,860			199,779			161,517
Staff costs		238,868			214,857			715,348			626,377
Depreciation		12,204			12,289			36,437			34,964
Amortization of intangible assets		3,870			3,338			12,098			9,845
Severance and exit costs		1,655			—			9,987			—
Other operating expenses		138,497			131,745			416,663			383,008

Total operating expenses		1,216,255			1,154,493			3,653,784			3,307,886

Operating income		48,281			43,911			106,815			96,764
Interest expense, net		(3,323	)		(4,476	)		(11,414	)		(12,521	)
Other (expense)/income, net		(677	)		1,168			(278	)		2,183

Pretax income		44,281			40,603			95,123			86,426
Provision for income taxes		13,971			12,851			29,465			27,106

Net income		30,310			27,752			65,658			59,320
Net income attributable to noncontrolling interests		1,774			1,329			5,506			3,954

Net income attributable to UTi Worldwide Inc.	$	28,536		$	26,423		$	60,152		$	55,366

Basic earnings per common share attributable to UTi Worldwide Inc. common shareholders	$	0.28		$	0.26		$	0.59		$	0.55
Diluted earnings per common share attributable to UTi Worldwide Inc. common shareholders	$	0.28		$	0.26		$	0.58		$	0.54
Number of weighted-average common shares outstanding used for per share calculations
Basic shares		102,755,296			100,736,378			102,514,547			100,487,558
Diluted shares		103,410,669			102,016,552			103,460,757			101,866,470

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UTi Worldwide Inc.

Condensed Consolidated Balance Sheets

(in thousands)


	October 31, 2011			January 31, 2011
		(Unaudited	)
ASSETS

Cash and cash equivalents	$	339,030		$	326,795
Trade receivables, net		1,028,244			879,842
Deferred income taxes		10,845			20,400
Other current assets		140,737			131,295

Total current assets		1,518,856			1,358,332
Property, plant and equipment, net		205,594			175,700
Goodwill and other intangible assets, net		538,752			515,578
Investments		1,137			1,102
Deferred income taxes		20,769			29,526
Other non-current assets		39,299			32,467

Total assets	$	2,324,407		$	2,112,705

LIABILITIES & EQUITY

Bank lines of credit	$	154,834		$	170,732
Short-term borrowings		879			7,238
Current portion of long-term borrowings		21,780			34,232
Current portion of capital lease obligations		14,254			16,232
Trade payables and other accrued liabilities		879,582			822,887
Income taxes payable		10,937			8,521
Deferred income taxes		1,117			3,881

Total current liabilities		1,083,383			1,063,723
Long-term borrowings, excluding current portion		221,253			61,230
Capital lease obligations, excluding current portion		17,686			19,158
Deferred income taxes		15,174			30,487
Other non-current liabilities		38,757			37,943
Commitments and contingencies
UTi Worldwide Inc. shareholders’ equity:
Common stock		486,877			484,884
Retained earnings		491,294			437,307
Accumulated other comprehensive loss		(44,332	)		(35,116	)

Total UTi Worldwide Inc. shareholders’ equity		933,839			887,075
Noncontrolling interests		14,315			13,089

Total equity		948,154			900,164

Total liabilities and equity	$	2,324,407		$	2,112,705

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UTi Worldwide Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Nine months ended October 31,
	2011			2010
	(Unaudited)
OPERATING ACTIVITIES:
Net income	$	65,658		$	59,320
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation costs, net		11,302			6,396
Depreciation		36,437			34,964
Amortization of intangible assets		12,098			9,845
Amortization of debt issuance costs		1,925			2,256
Deferred income taxes		275			286
Uncertain tax positions		391			(1,491	)
Excess tax benefit from share-based compensation		(430	)		(102	)
(Gain)/loss on disposal of property, plant and equipment		(632	)		102
Provision for doubtful accounts		4,474			3,901
Other		1,512			2,288
Net changes in operating assets and liabilities		(111,339	)		(106,035	)

Net cash provided by operating activities		21,671			11,730

INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(36,969	)		(27,337	)
Proceeds from disposal of property, plant and equipment		4,706			1,280
Purchases of software and other intangible assets		(26,217	)		(10,369	)
Net increase in other non-current assets		(4,186	)		(4,623	)
Acquisitions and related payments		—			(3,449	)
Other		(29	)		(283	)

Net cash used in investing activities		(62,695	)		(44,781	)

FINANCING ACTIVITIES:
Net (repayments)/borrowings under bank lines of credit		(19,450	)		75,910
Net (decrease)/increase in short-term borrowings		(6,588	)		782
Proceeds from issuance of long-term borrowings		153,988			81
Repayment of long-term borrowings		(35,286	)		(37,997	)
Debt issuance cost		(2,153	)		—
Repayment of capital lease obligations		(12,039	)		(14,797	)
Contingent consideration paid		(26	)		(3,734	)
Acquisition of noncontrolling interest		(13,196	)		(8,323	)
Dividends paid to noncontrolling interests		(157	)		(1,719	)
Ordinary shares settled under share-based compensation plans		(1,800	)		—
Proceeds from issuance of ordinary shares		1,803			4,011
Excess tax benefit from share-based compensation		430			102
Dividends paid		(6,165	)		(6,106	)

Net cash provided by financing activities		59,361			8,210
Effect of foreign exchange rate changes on cash and cash equivalents		(6,102	)		16,205

Net increase/(decrease) in cash and cash equivalents		12,235			(8,636	)
Cash and cash equivalents at beginning of period		326,795			350,784

Cash and cash equivalents at end of period	$	339,030		$	342,148

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UTi Worldwide Inc.

Segment Reporting

(in thousands)

(Unaudited)


	Three months ended October 31, 2011
	Freight Forwarding		Contract Logistics and Distribution		Corporate			Total
Revenues	$	859,855	$	404,681	$	—		$	1,264,536

Purchased transportation costs		658,436		162,725		—			821,161
Staff costs		110,609		120,614		7,645			238,868
Depreciation		4,287		7,465		452			12,204
Amortization of intangible assets		1,051		2,279		540			3,870
Severance and exit costs		909		675		71			1,655
Other operating expense		47,350		86,498		4,649			138,497

Total operating expenses		822,642		380,256		13,357			1,216,255

Operating income/(loss)	$	37,213	$	24,425	$	(13,357	)		48,281

Interest expense, net									(3,323	)
Other expense, net									(677	)

Pretax income									44,281
Provision for income taxes									13,971

Net income									30,310
Net income attributable to noncontrolling interests									1,774

Net income attributable to UTi Worldwide Inc.								$	28,536

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UTi Worldwide Inc.

Segment Reporting

(in thousands)

(Unaudited)


	Three months ended October 31, 2010
	Freight Forwarding		Contract Logistics and Distribution		Corporate			Total
Revenues	$	841,739	$	356,665	$	—		$	1,198,404

Purchased transportation costs		654,092		138,172		—			792,264
Staff costs		98,118		110,023		6,716			214,857
Depreciation		4,296		7,824		169			12,289
Amortization of intangible assets		1,149		2,189		—			3,338
Other operating expenses		50,160		77,397		4,188			131,745

Total operating expenses		807,815		335,605		11,073			1,154,493

Operating income/(loss)	$	33,924	$	21,060	$	(11,073	)		43,911

Interest expense, net									(4,476	)
Other income, net									1,168

Pretax income									40,603
Provision for income taxes									12,851

Net income									27,752
Net income attributable to noncontrolling interests									1,329

Net income attributable to UTi Worldwide Inc.								$	26,423

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UTi Worldwide Inc.

Segment Reporting

(in thousands)

(Unaudited)


	Nine months ended October 31, 2011
	Freight Forwarding		Contract Logistics and Distribution		Corporate			Total
Revenues	$	2,591,360	$	1,169,239	$	—		$	3,760,599

Purchased transportation costs		1,998,348		464,903		—			2,463,251
Staff costs		334,876		359,564		20,908			715,348
Depreciation		13,115		21,511		1,811			36,437
Amortization of intangible assets		3,262		6,956		1,880			12,098
Severance and exit costs		5,006		4,163		818			9,987
Other operating expense		147,000		255,320		14,343			416,663

Total operating expenses		2,501,607		1,112,417		39,760			3,653,784

Operating income/(loss)	$	89,753	$	56,822	$	(39,760	)		106,815

Interest expense, net									(11,414	)
Other expense, net									(278	)

Pretax income									95,123
Provision for income taxes									29,465

Net income									65,658
Net income attributable to noncontrolling interests									5,506

Net income attributable to UTi Worldwide Inc.								$	60,152

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UTi Worldwide Inc.

Segment Reporting

(in thousands)

(Unaudited)


	Nine months ended October 31, 2010
	Freight Forwarding		Contract Logistics and Distribution		Corporate			Total
Revenues	$	2,372,503	$	1,032,147	$	—		$	3,404,650

Purchased transportation costs		1,851,574		402,118		—			2,253,692
Staff costs		286,871		321,664		17,842			626,377
Depreciation		12,093		22,329		542			34,964
Amortization of intangible assets		3,179		6,666		—			9,845
Other operating expenses		143,043		224,468		15,497			383,008

Total operating expenses		2,296,760		977,245		33,881			3,307,886

Operating income/(loss)	$	75,743	$	54,902	$	(33,881	)		96,764

Interest expense, net									(12,521	)
Other income, net									2,183

Pretax income									86,426
Provision for income taxes									27,106

Net income									59,320
Net income attributable to noncontrolling interests									3,954

Net income attributable to UTi Worldwide Inc.								$	55,366

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UTi Worldwide Inc.

Geographic Reporting

(in thousands)

(Unaudited)


	Three months ended October 31, 2011
	Freight Forwarding Revenue		Contract Logistics and Distribution Revenue		Freight Forwarding Net Revenue		Contract Logistics and Distribution Net Revenue		Operating Income/(Loss)
EMENA	$	256,160	$	54,690	$	66,424	$	38,217	$	2,441
Americas		195,407		227,441		48,525		105,429		14,501
Asia Pacific		277,047		16,416		56,907		10,418		20,061
Africa		131,241		106,134		29,563		87,892		24,635
Corporate		—		—		—		—		(13,357	)

Total	$	859,855	$	404,681	$	201,419	$	241,956	$	48,281


	Three months ended October 31, 2010
	Freight Forwarding Revenue		Contract Logistics and Distribution Revenue		Freight Forwarding Net Revenue		Contract Logistics and Distribution Net Revenue		Operating Income/(Loss)
EMENA	$	240,001	$	63,543	$	61,386	$	36,764	$	2,848
Americas		173,248		189,405		48,526		99,327		15,281
Asia Pacific		314,662		12,156		50,130		7,975		17,068
Africa		113,828		91,561		27,605		74,427		19,787
Corporate		—		—		—		—		(11,073	)

Total	$	841,739	$	356,665	$	187,647	$	218,493	$	43,911

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UTi Worldwide Inc.

Geographic Reporting

(in thousands)

(Unaudited)


	Nine months ended October 31, 2011
	Freight Forwarding Revenue		Contract Logistics and Distribution Revenue		Freight Forwarding Net Revenue		Contract Logistics and Distribution Net Revenue		Operating Income/(Loss)
EMENA	$	808,050	$	169,756	$	201,492	$	115,052	$	1,596
Americas		574,877		647,313		144,912		306,781		30,177
Asia Pacific		825,159		46,006		162,595		29,330		52,765
Africa		383,274		306,164		84,013		253,173		62,037
Corporate		—		—		—		—		(39,760	)

Total	$	2,591,360	$	1,169,239	$	593,012	$	704,336	$	106,815


	Nine months ended October 31, 2010
	Freight Forwarding Revenue		Contract Logistics and Distribution Revenue		Freight Forwarding Net Revenue		Contract Logistics and Distribution Net Revenue		Operating Income/(Loss)
EMENA	$	700,329	$	191,626	$	178,771	$	111,702	$	8,051
Americas		488,886		545,561		133,617		284,312		30,522
Asia Pacific		886,693		32,475		136,735		21,903		42,189
Africa		296,595		262,485		71,806		212,112		49,883
Corporate		—		—		—		—		(33,881	)

Total	$	2,372,503	$	1,032,147	$	520,929	$	630,029	$	96,764

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UTi Worldwide Inc.

Organic Growth Reconciliation

(Unaudited)

Set forth below 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 nine months ended October 31, 2011 and 2010, respectively. Organic growth is a non-GAAP measure that excludes the impact of foreign currency translation and acquisitions, where applicable.

Three months ended October 31, 2011:


	Organic Growth			+/(-) Currency Impact			Total Net Change
Revenues		5	%		1	%		6	%
Net revenues		9	%		—	%		9	%
Operating expenses less purchased transportation costs		9	%		—	%		9	%

Nine months ended October 31, 2011:


	Organic Growth			+/(-) Currency Impact			Total Net Change
Revenues		6	%		4	%		10	%
Net revenues		8	%		5	%		13	%
Operating expenses less purchased transportation costs		9	%		4	%		13	%

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