UTi Worldwide rebounds from 4Q net loss

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UTi Worldwide Inc. reported financial results for its fiscal 2010 fourth quarter ended Jan. 31:
• Revenues were $991.5 million, an increase of 11 percent from $894.1 million;
• Net revenues (revenues minus purchased transportation costs) were $350.6 million, an increase of five percent from $332.7 million;
• Net income attributable to UTi Worldwide Inc. was $1.5 million compared to a net loss of $89.8 million;
• Adjusting for goodwill impairment and other charges and a higher tax rate than historical levels, adjusted net income attributable to UTi Worldwide Inc. for the fiscal 2010 fourth quarter was $10.9 million;
• Excluding goodwill impairment and other charges, adjusted net income attributable to UTi Worldwide Inc. in the fiscal 2009 fourth quarter was $15.3 million; and
• Net cash provided by operating activities was $68.3 million compared to $77.6 million. Net cash provided by operating activities for fiscal 2010 was $120.0 million compared to $150.5 million in fiscal 2009.

“Financial results in the fourth quarter were severely affected by sharply higher transportation costs and the associated reduction in yields, which more than offset a significant increase in volumes,” said Eric W. Kirchner, chief executive officer of UTi Worldwide, based in Long Beach, Calif. “The industry experienced a longer and more pronounced peak season than we have seen in several years, leading to an unanticipated surge in volumes in a market with limited capacity. As a result, transportation rates continued to climb throughout the fourth quarter.”

Kirchner said yield compression was particularly acute in January, as volumes remained strong and carrier rates moved higher. “Because of the lag inherent in passing these rising costs onto clients, we have not yet seen meaningful yield improvement in the first quarter of fiscal 2011,” he said. “The circumstances leading to the industrywide yield contraction are expected to stabilize over time, and this will allow us to pass through higher prevailing transportation rates to clients.”

Kirchner said the volatile environment the industry experienced in fiscal 2010 underscores the need for UTi Worldwide to transform its business in order to achieve lasting margin improvement. “We have made considerable progress over the past six months with the foundational elements of our transformation plan required to support more efficient common global processes and to drive long-term profitability.” he said. “We will continue to move forward aggressively with these activities to achieve our goal of full deployment by the beginning of fiscal 2014.”