CEVA Holdings LLC Investor Call First quarter May 2017

Transcription

1 CEVA Holdings LLC Investor Call First quarter May 2017

2 1Executive Summary Good growth with revenue up 5% YoY in constant currency, both in Freight Management and Contract Logistics Continued profitability improvement: Adjusted EBITDA of $54 million, up $2 million in constant currency despite volatile market conditions and comparative Delivering cost savings through Operational Excellence Program Operating cash flow improved by $13 million reflecting continued focus on cash ANJI-CEVA joint venture renewed for 15 years Refinancing of key 2018 maturities successfully completed Adjusted EBITDA Includes the Group s share of EBITDA from the Anji-CEVA joint venture, and excludes specific items and share based compensation costs ( SBC ). 2

3 Agenda 1 Business update 2 Financial results 3 Outlook 3

4 Business line overview: Air Key developments Strong volume growth and increase in market share in driven by intra-asia trade lanes and exports from Asia and Europe Margins partially recovering from peak season except for the Asia-US trade lane Productivity improvements and progress on excellence program generate cost savings Air export volumes (t) quarterly growth (YoY, percent) Yield: Net Revenue / t ($) Q2 Volumes (thousand t) Q3 Q CEVA 2017 current quarter CEVA prior periods Market Q2 Q3 Q Sources : CEVA, IATA, Estimates for 2017 market growth

5 Business line overview: Ocean Key developments Good volume growth and increase in market share on core trade lanes : transpacific Eastbound and between Asia and Europe Continued margin pressures in view of rate increases, especially on routes out of Asia Important productivity improvements, offsetting margin pressure from rates Ocean volumes (TEU) quarterly growth (YoY, percent) Yield: Net Revenue / TEU ($) * Q2 Q3 Q Volumes (thousand TEU) Q2 CEVA 2017 current quarter Q3 Q4 CEVA prior periods 2017 Market * Normalized for true-up effects 5 Sources : CEVA, Drewry,, Estimates for 2017 market growth

6 Business line overview: Contract Logistics Key developments Continued revenue growth from last year s new wins and volume growth on existing contracts Expanding opportunity pipeline Efficiency improvements in many contracts, masked by mix effects Excellence program to further strengthen margins CL topline development (YoY, % growth, constant currency) Idle m² as % of Total m² Q2 Q3 Q Q2 Q3 Q CEVA 2017 current quarter CEVA prior periods 6 Source: CEVA

7 Excellence Programme key areas pursued Personnel : Productivity improvements FM and CL / better managing labour to volume Headcount reductions, addressing excess labour Organisation review, spans and layers Temporary labour mix and rates Rationalisation of real estate : closure of facilities, reduction of footprint and renegotiation of contracts Optimisation of ground transport networks, contracting Procurement : renegotiation of MHE, IT and other key supplier contracts Streamlining of SG&A Renegotiation or termination of low margin contracts, cleaning of book of business 7

8 Progress on Excellence Programme - Examples Air and Ocean productivity Large US CL contract (among top17) US headcount Files/operator, indexed Productivity, indexed FTE (incl. temp labor) ,254 12,425 11, % Air Ocean Q2 16 Q3 16 Q Q

9 ANJI-CEVA Renewal Key facts - First logistics joint venture established in Leading automotive contract logistics provider in China with a revenue of US$ 973 million and EBITDA of US$ 84 million in and more than 15,000 employees - Services cover inbound logistics, aftermarket contract logistics, import and export and ground transport with own network covering more than 400 cities Key terms of the renewal - Extension of the JV for 15 years, until May / 50 shareholding between CEVA and ANJI maintained - JV business scope expanded to non-automotive contract logistics activities across greater China - Merger of CEVA China s Contract Logistics business ( revenue US$ 42 million) Besides the JV, CEVA maintains strong presence in China in Freight Management ( revenue US$ 660 million) 9

10 Agenda 1 Business update 2 Financial results 3 Outlook 10

11 Financial Results Overview Quarter ending 31 March ($ million) at constant Fx ($ million) ($ million) Delta ( % / $ million) Delta at constant Fx ( % / $ million) Revenue 1,596 1,645 1, % 5.0% Adjusted EBITDA (1) 2 EBITDA Margin 2 2.8% 2.9% 2.9% Change in NWC (97) (97) - Operating cash flow (60) (73) 13 Headroom (124) 1 Adjusted EBITDA Includes the Group s share of EBITDA from the Anji-CEVA joint venture, and excludes specific items and share based compensation costs ( SBC ). 2 Before specific items and SBC. EBITDA excludes the Group s share of EBITDA from the Anji-CEVA joint venture. 11

12 Group P&L All figures above EBITDA are before specific items and SBC 2017 ($ million) ($ million) Revenue 1,596 1,566 Purchased Transportation (769) (723) Net Revenue Personnel (500) (518) Other Net Operating Expenses (282) (279) EBITDA before specific items and SBC EBITDA Margin 2.8% 2.9% Specific items and SBC 1 (11) (4) Depreciation & Amortization (26) (38) Net Finance Expense (53) (43) Net result from joint venture 4 4 Tax (16) 38 Net Income (57) 3 Anji-CEVA EBITDA share 9 9 Adjusted EBITDA Specific items/sbc 1 include restructuring, legacy litigation and non-cash SBC Finance expense impacted by currency revaluation Tax credit PY reflects DTA 1. Share-based compensation 2. Adjusted EBITDA Includes the Group s share of EBITDA from the ANJI-CEVA joint venture, and excludes specific items and share based compensation costs ( SBC ) 12

13 Results Freight Management All figures are before specific items and SBC Three months ending 31 March ($ million) 2017 at constant Fx ($ million) ($ million) Delta at constant Fx ( % / $ million) Revenue % Net Revenue % Net Revenue margin 28.9% 30.6% Personnel Cost (127) (133) Other operating Expenses (66) (65) EBITDA EBITDA Margin 1.4% 1.4% 1.5% Freight management is negatively impacted by white space / other FM activities (e.g., storage) in US, currently undergoing a clean-up 13

14 Results Contract Logistics All figures are before specific items and SBC Three months ending 31 March ($ million) 2017 at constant Fx ($ million) ($ million) Delta at constant Fx ( % / $ million) Revenue % Net Revenue % Personnel Cost (373) (385) Other operating expenses (216) (214) EBITDA EBITDA Margin 3.9% 4.0% 4.1% 14

15 Net Working Capital $ million Current assets 1,216 1,238 Current liabilities 1,299 1,357 NWC (83) (119) Cumulative cash flows from NWC $ million 2015/ / Change in NWC - Balance sheet (98) (77) (50) Currency and other non-cash items 6 (20) Change in NWC - IFS Cash flow (92) (97) Non-cash specific items 1 (5) 0 Change in NWC - Cash flow (97) (97) (100) (150) (200) PY Q2 Q3 Q4 c. $5m outflow related to FM growth NWC refers to working capital inclusive of tax balances, miscellaneous receivables/payables and effects of foreign exchange 1. Add-back of non-cash specific items to present NWC consistently with Cash flow statement in this presentation, reflects short-term provisions 15

16 Cash Flow 2017 ($ million) ($ million) EBITDA before specific items and SBC Cash-relevant specific items (3) (4) Gain on disposal of PP&E 0 (10) Retirement Benefit Obligations (1) (1) Provisions (1) (2) Change in working capital (97) (97) Other (3) (5) Operating cash flow (60) (73) Net finance expenses (37) (33) Tax (11) (7) Capital expenditure (25) (16) Free cash flow (133) (129) Proceeds from sale of PP&E 1 32 Dividends received 0 15 Net fund movement (132) (82) 16

17 2018 debt maturities successfully addressed 4% Notes Completion of exchange offer with respect to 4% first lien senior secured notes due 2018 for new 9% first lien senior secured notes due September 2020 ( New Notes ), 90% exchanged New Notes pay 6% cash and 3% PIK interest New Notes covenants largely aligned with 7% Notes European ABS Maturity extended to March 2020 No change in rates Facility increased by 80 million to 250 million 17

18 Liquidity $ million Total cash and cash equivalents 239 Availability under committed credit facilities 240 Total headroom 479 Debt Maturity Profile (after completion of the exchange) $ million 1, maturity includes US ABL and remainder of 4% Notes 18

19 Agenda 1 Business update 2 Financial results 3 Outlook 19

20 Outlook Challenging market dynamics, continued net margin pressures expected to ease though as the year progresses Planning for moderate growth in both Contract Logistics and Freight Management Turnaround in underperforming areas on track, notably in the US Excellence program to deliver further cost savings Continued focus on cash / NWC Still much to do but well on track for a stronger year 20

21 Appendix 21

22 Quarterly financial performance actual currency All figures in actual currency 2017 ($ million) ($ million) Delta (percent) Q2 Q3 Q4 YTD Q2 Q3 Q4 FY Q2 Q3 Q4 YTD Freight Management Revenue , Net Revenue (2.4) EBITDA Contract Logistics Revenue , Net Revenue ,571 (1.8) EBITDA (2.8) Group Revenue 1, ,596 1,566 1,666 1,679 1,735 6, Net Revenue ,445 (1.9) EBITDA (2.2) Adjusted EBITDA (1.8) Excluding specific items and share-based compensation 2. Adjusted EBITDA includes the Group s share of ANJI-CEVA but excludes specific items and share-based compensation 22

23 Quarterly financial performance constant currency 2017 figures in constant currency 2017 ($ million) ($ million) Delta (percent) Q2 Q3 Q4 YTD Q2 Q3 Q4 FY Q2 Q3 Q4 YTD Freight Management Revenue , Net Revenue (1.4) EBITDA Contract Logistics Revenue , Net Revenue , EBITDA Group Revenue 1, ,645 1,566 1,666 1,679 1,735 6, Net Revenue , EBITDA Adjusted EBITDA Excluding specific items and share-based compensation 2. Adjusted EBITDA includes the Group s share of ANJI-CEVA but excludes specific items and share-based compensation 23

24 Balance sheet All figures in actual currency $ million Assets Property, plant and equipment Goodwill 1,283 1,266 Other intangibles Others Non-current assets 1,797 1,785 Trade receivables 990 1,019 Cash and cash equivalents Others Current assets 1,479 1,555 $ million Liabilities and equity Equity attributable to the equity holders of the parent company (563) (541) Non-controlling interests 3 3 Total equity (560) (538) Non-current liabilities 2,390 2,362 Trade and other payables 1,217 1,314 Borrowings Others Current liabilities 1,446 1,516 Total assets 3,276 3,340 Total liabilities and equity 3,276 3,340 24

25 Group debt overview All figures in actual currency $ million Cash and cash equivalents Revolver due March Term loans due March US ABL Facility due December ABS Europe due March Australian Receivables Facility due September % First Lien Senior Secured Notes due March % Senior Secured Notes due May 2018* Finance Leases and Other Secured Debt Net First-Lien Debt 1,622 1, % 1.5 Lien Priority Lien Notes due September Net Secured Debt 1,947 1, % Senior Notes due March Other Debt Net Operating Debt 2,103 1,992 *4% Senior Secured Notes is at principal value (Principal Value: $390m; Carrying Value: $376m), status prior to completion of the exchange offer 25

26 Safe harbor statement These materials 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 or joint ventures, its liquidity and capital resources, its guidance for 2017 and beyond and the other nonhistorical 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 these materials 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. 26

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