UTi Worldwide Reports Fiscal 2012 Fourth Quarter Results

LONG BEACH, Calif., March 22, 2012 (GLOBE NEWSWIRE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today reported financial results for its fiscal 2012 fourth quarter ended January 31, 2012.

Fiscal Fourth Quarter 2012 vs. 2011 Results:

• Revenues were $1,153.6 million, an increase of 0.7 percent from $1,145.1 million.
• Net revenues (revenues minus purchased transportation costs) were $406.5 million, an increase of 0.5 percent from $404.5 million.
• Net income attributable to UTi Worldwide Inc. was $12.4 million, or $0.12 per diluted share, in the fourth quarter of fiscal 2012, compared to $14.5 million, or $0.14 per diluted share.
• Adjusting for intangible asset impairment, severance and other charges, adjusted net income attributable to UTi Worldwide Inc. was $20.3 million, or $0.20 per diluted share in the fiscal 2012 fourth quarter.
• All references to adjusted 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, "It is encouraging that we were able to deliver a solid operating result in the fourth quarter in a difficult environment. On an adjusted basis, operating profit grew 24 percent and net income rose 39 percent compared to last year's fourth quarter. As expected, the strengthening of the U.S. dollar, particularly against the South African rand, had a negative impact on revenue growth in the period. On an organic basis (excluding currency effects), net revenues increased 5.8 percent in the quarter primarily due to increased activity in contract logistics and distribution and higher net revenue per unit of cargo in freight forwarding. Volumes in freight forwarding were weak in our fourth quarter, particularly in the month of January, due to a soft market and the timing of Chinese New Year. Despite a challenging environment last year, operating results improved, cash flow increased, and we made good progress in our transformation activities."

Revenues increased 0.7 percent in the 2012 fiscal fourth quarter compared to the prior-year fourth quarter primarily due to increased contract logistics and distribution activity, growth in ocean volumes and higher fuel surcharges. These factors were partially offset by the impact of currency and lower volumes in airfreight. Net revenues increased 0.5 percent in the fourth quarter, reflecting higher net revenue per unit of cargo in freight forwarding.

Currency fluctuations, particularly relating to the South African rand, had a significant impact on revenues and net revenues in the fourth quarter. Organic revenues increased 4.6 percent and organic net revenues were up 5.8 percent in the fiscal 2012 fourth quarter, compared to the same period last year.

Intangible asset impairment, severance and other costs totaled $10.3 million in the fiscal 2012 fourth quarter, comprising an intangible asset impairment charge of $5.2 million, severance and exit costs of $2.0 million, and an accrual of $3.1 million relating to an outstanding legal claim. The intangible asset impairment relates to substantially all of the unamortized valuation of the customer list from an acquisition in 2004. The intangible asset became impaired when the expected useful life of this customer list was shortened with the non-renewal of a contract, effective from July 2012, in which the company was not prepared to lower its returns to retain the business. The accrual for the outstanding legal claim relates to the previously reported dispute with the South African Revenue Service (SARS) over the use of "owner drivers" for the collection and delivery of cargo, and represents the company's best estimate of the total settlement value for all years under dispute based on recent formal settlement discussions with SARS. Discussions are ongoing and no formal settlement has been reached. The company has proposed to settle this claim without admitting liability in order to avoid further costs and protracted litigation.

Operating expenses less purchased transportation costs were $384.7 million in the fourth quarter of fiscal 2012. Excluding intangible asset impairment, severance and other costs described above, adjusted operating expenses less purchased transportation costs were $374.3 million, a decrease of 1.1 percent compared to the same period last year. Organic growth in adjusted operating expenses less purchased transportation costs was 4.1 percent compared to the same period last year.

Operating income in the fiscal 2012 fourth quarter was $21.9 million. Excluding intangible asset impairment, severance and other costs described above, adjusted operating income in the fourth quarter of fiscal 2012 was $32.2 million, or 7.9 percent of net revenues. This compares to operating income in the year-ago fourth quarter of $26.0 million, or 6.4 percent of net revenues. The operating income and margin increases primarily reflect increased activity in contract logistics and distribution and higher net revenue per unit of cargo, partially offset by higher expenses, compared to the same period last year.

Kirchner concluded, "As we look ahead, it is difficult to predict how the global economy and world trade will perform this year. It is likely that volumes will remain soft in the first half of the year, with the possibility of modest growth in the second half. We have several initiatives in place intended to drive growth ahead of the market. We will continue to make process improvements such as better buying and enhanced utilization of our gateway structure. And we will remain focused on delivering margin improvement over the long-term. Our transformation is progressing; we deployed our new finance system, we have completed the development of our new freight forwarding operating system, and we continue to test the integration of these systems in the Netherlands. We expect to complete this testing in the near future and begin the rollout of the integrated system throughout the world shortly thereafter. The amount and timing of expected benefits and expenses from the transformation remain consistent with what we communicated at our investor day last June, and we still plan to achieve our operating margin goals no later than fiscal 2015."

Investor Conference Call:

UTi management will host an investor conference call today, March 22, 2012, at 8:00 a.m. PDT (11:00 a.m. EDT) to review the company's financial results for the fiscal 2012 fourth quarter. Investment professionals are invited to participate in the live call by dialing 800-762-8779 (domestic) or 480-629-9692 (international) using conference ID 4521333. 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. PDT, today, through March 25, 2012, by calling 800-406-7325 (domestic) or 303-590-3030 (international) and using replay passcode 4521333.

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 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; and to organic adjusted operating expenses less purchased transportation costs, which are adjusted to exclude intangible asset impairment charges, severance and exit costs, and an accrual relating to an outstanding legal claim and the impact of currency fluctuations, and, where applicable, acquisitions between comparable periods. The company has further referred to adjusted operating profit and adjusted net income, each of which is adjusted to exclude intangible asset impairment charges, severance and other costs, and an accrual relating to an outstanding legal claim as described above. 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 global economy and world trade, volume growth, the company's ability to drive growth ahead of the market and make process improvements such as better buying and enhanced utilization of its gateway initiatives, the amount and timing of expenses and benefits from the transformation, the company's plan to make margin improvements over the long-term and achieve its operating margin goals no later than fiscal 2015, the status and timing of the completion of the freight forwarding operating and finance systems and the rollout of the integrated system throughout the world, and other statements not of an historical nature. 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 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 the potential for penalties, fines, costs and expenses the company may incur as a result of the ongoing publicly announced U.S. Department of Justice, the European Commission and other governments into the pricing practices of the international air freight and 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.

(1) During the three months ended January 31, 2012, the company recorded pre-tax severance of $1,572 and facility exit costs of $467 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(2) During the year ended January 31, 2012, the company recorded pre-tax severance of $9,645 and facility exit costs of $2,381 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(3) During the three months and year ended January 31, 2012, the company recorded a pre-tax intangible asset impairment totaling $5,178, relating to substantially all of the unamortized valuation of the customer list from an acquisition in 2004. The intangible asset became impaired because of the recently advised non-renewal of one contract beginning in July 2012 where the company was not prepared to lower its returns to retain the business.

(4) The provisions for income tax adjustment related to the severance and facility exit costs and the intangible asset impairment were calculated based on the prevailing rate in each jurisdiction. The settlement charge was not deductible for tax purposes in South Africa.

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 twelve months ended January 31, 2012, respectively. Organic growth is a non-GAAP measure that excludes the impact of foreign currency translation and acquisitions, where applicable.

(5) During the three months ended January 31, 2012, the company recorded pre-tax severance of $1,572 and facility exit costs of $467 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(6) During the year ended January 31, 2012, the company recorded pre-tax severance of $9,645 and facility exit costs of $2,381 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(7) During the three months and year ended January 31, 2012, the company recorded a pre-tax intangible asset impairment totaling $5,178, relating to substantially all of the unamortized valuation of the customer list from an acquisition in 2004. The intangible asset became impaired because of the recently advised non-renewal of one contract beginning in July 2012 where the company was not prepared to lower its returns to retain the business.