CEVA Maintains forward momentum
CEVA Holdings LLC
Results for the First Quarter ended 31 March 2016
- Adjusted EBITDA up 15.7% in constant currency against revenue drop of 5.3% in face of persistent market headwinds and rate decreases
- Freight Management EBITDA¹ of $10 million, reflecting a YoY increase of 57.1% in constant currency. Air freight volumes up 1.5%; Ocean freight volumes up 1.0%
- Contract Logistics EBITDA1 of $36 million, reflecting a YoY increase of 11.4% in constant currency.
Hoofddorp, the Netherlands, 2 May, 2016 – CEVA Holdings LLC (“CEVA” or the “Company”), one of the world’s leading asset-light based supply chain management companies, today reported results for the first quarter 2016 ended 31 March 2016.
|Key Financials ($ millions)||Quarter|
|Q1 2016||Q1 2015(a)||% Change||% Change Constant FX|
|Adjusted EBITDA (b)||55||51||7.8%||15.7%|
¹ Segmental EBITDA refers to EBITDA before specific items
(a) Key Financials table above exclude the impact of disposals representing $32 million for revenue and a nil impact on EBITDA in Q1 2015.
(b) Adjusted EBITDA includes the proportional contribution of the Anji-CEVA joint venture ($9m) and excludes the impact of specific items which are significant non-recurring items such as restructuring and certain legal expenses.
“2016 continues the trend we started in 2015. Market headwinds continue to affect all industry players, yet despite this climate CEVA Air and Ocean volumes increased by 1.5% and 1.0% respectively. We also maintain forward momentum through our ongoing focus on productivity and procurement improvements in both Freight Management and Contract Logistics. In parallel, we continue to strengthen our market share on the Trans-pacific trade lane,” said Xavier Urbain, CEO. “Our successful operating model is consistently implemented across the business and we are uniquely positioned to support global customers of all sizes to meet their business goals. A number of complex customer solutions were successfully implemented in Q1. We have also launched a transformation program of our US operations including its Ground business.”
Freight Management EBITDA of $10 million, reflecting a YoY increase of 57.1% in constant currency, supported by strong trade lane activity with China as origin or destination as a major contributing factor. The business line’s net revenue margin was 30.7%, an increase of 3.9 percentage points YoY, driven predominantly by proactive and smart optimization of our procurement efforts which ultimately benefit customer selling rates and CEVA profitability.
In the face of a soft market, Air volumes increased 1.5% YoY, above a very strong Q1 2015 which was due to US West Coast port congestion. A stronger field sales focus has led to a number of wins with small to medium-sized enterprises, including on trade lanes from Europe to Asia or Latin America to Europe. We continue to address reduced Ocean market demand through our focus on trade lane optimization where we are seeing first success with Ocean volumes being up by 1.0% YoY. In particular, the Far East Westbound (Asia-Europe) and Intra Asia trade lanes performed well in Q1. Although market headwinds linger, we continuously focus on growing and optimizing our LCL business and have introduced several new LCL consolidation services in Q1, resulting in improved processes and transit times for our customers.
CEVA’s Ground business recently launched a transformation program in the US, one of the major markets for Ground business and a key cluster for CEVA. An Asia Pacific cross-border initiative was also initiated to better leverage our strong footprint in the region for both LTL and FTL services. Project Logistics also remains a significant growth area, with recent appointments of established industry leaders.
Contract Logistics EBITDA at $36 million, which reflects a YoY increase of 11.4% in constant currency. This increase was driven by gains on disposals and improved space utilization/productivity partly offset by site restructuring and customer bad debt provisioning. Based on a comprehensive global operations benchmarking review undertaken in 2015, Automotive after-market and Tire sub-sectors were the first areas to implement productivity and process improvements in Q1, with other sectors now following suit. Contract Logistics is closely managing efforts to fill empty warehouse space at the site level.
Our Zero Default Start-up methodology and expertise allowed for a number of new complex, labor-intensive operations to be successfully implemented in Q1 without significant start-up issues. CEVA’s end-to-end Supply Chain Solutions (4PL and LLP) continued to gain traction in Q1 with major new business wins in the Automotive, Healthcare and Consumer & Retail sectors.
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CEVA - Making business flow
CEVA Logistics, one of the world’s leading non-asset based supply-chain management companies, designs and implements industry leading solutions for large and medium-size national and multinational companies. Approximately 41,000 employees in more than 160 countries are dedicated to delivering effective and robust supply-chain solutions across a variety of sectors where CEVA applies its operational expertise to provide best-in-class services across its integrated network. For more information, please visit www.cevalogistics.com.
SAFE HARBOR STATEMENT:
This news release may contain forward-looking statements. These statements include, but are not limited to, discussions regarding industry outlook, the Company’s expectations regarding the performance of its business, its liquidity and capital resources, its guidance for 2016 and beyond, and the other non-historical statements. These statements can be identified by the use of words such as “believes” “anticipates,” “expects,” “intends,” “plans,” “continues,” “estimates,” “predicts,” “projects,” “forecasts,” and similar expressions. All forward-looking statements are based on management’s current expectations and beliefs only as of the date of this press release and, in addition to the assumptions specifically mentioned in the above paragraphs, there are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including the effect of local and national economic, credit and capital market conditions, a downturn in the industries in which we operate (including the automotive industry and the airfreight business), risks associated with the Company’s global operations, fluctuations and increases in fuel prices, the Company’s substantial indebtedness, restrictions contained in its debt agreements and risks that it will be unable to compete effectively. Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s annual and quarterly reports, available on the Company’s website, which investors are strongly encouraged to review. Should one or more of these risks or uncertainties materialize or the consequences of such a development worsen, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. CEVA disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.