UTi Worldwide Q3 Adj Profit Meets View, Revenues Top

(RTTNews) - Supply chain services company UTi Worldwide, Inc. (UTIW) reported Thursday a loss for the third quarter compared to a profit last year, reflecting lower operating margins and a revenue decline. Adjusted earnings per share matched analysts' expectations, while quarterly revenues topped their estimates.

"Our fiscal 2014 third quarter results reflect increased activity in both our freight forwarding and contract logistics and distribution segments, offset by transformation-related costs. Our sales efforts drove freight forwarding volume growth that was ahead of the market, particularly in airfreight," CEO Eric Kirchner said in a statement.

The Road Town, the British Virgin Islands-based company reported a net loss of $9.08 million or $0.09 per share for the third quarter, compared to net income of $10.55 million or $0.10 per share in the prior-year quarter.

Results for the latest quarter includes after-tax severance costs of $0.12 per share, and additional tax expense, exceeding its normalized tax rate, of $0.05 per share. Excluding items, adjusted net income for the quarter was $8.1 million or $0.08 per share.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.08 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenues for the quarter edged down 0.2 percent to $1.154 billion from $1.157 billion in the same quarter last year, but topped nine Wall Street analysts' consensus estimate of $1.14 billion.

Net revenues, excluding purchased transportation costs, decreased 2.5 percent to $393.5 million from last year's $403.6 million.

On an organic basis, revenues increased 3.1 percent, and net revenues grew 1.6 percent from last year.

Airfreight forwarding revenues edged down to $342.45 million from $344.76 million, while ocean freight forwarding revenues grew to $334.62 million from $323.25 million in the year-ago quarter.

Contract logistics revenues decreased to $190.70 million from $203.35 million, while distribution revenues grew $157.30 million from $152.77 million in the prior-year quarter. Customs brokerage revenues were $37.95 million, up from $29.66 million last year.

Operating income for the quarter plunged to $7.25 million from $22.68 million in the prior-year quarter, and total operating expenses were $1.15 billion, up from $1.13 billion in the year-ago quarter.

Adjusted operating margin for the quarter contracted 270 basis points to 5.2 percent from last year's 7.9 percent.

"Rates were under pressure in the third quarter and this led to a decline in net revenue per unit of cargo that partially offset the higher volumes. We anticipate this rate pressure to continue for the foreseeable future," Kirchner added.

The company noted that it expects to realize cumulative gross pre-tax cost savings of about $75 million to $95 million on an annualized go-forward basis by the end of fiscal 2015, beginning with the cost actions taken during the third quarter.

UTIW closed Wednesday's regular trading session at $15.56, up $0.14 on a volume of 0.63 million shares.