UTi Worldwide Inc UTIW
Q4 2013 Earnings Call Transcript

Transcript Call Date 03/28/2013

Operator: Welcome to the UTi 2013 Fourth Quarter Conference Call on the 28th of March, 2013. Throughout today's presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions.

I will now hand the conference over to Jeff Misakian. Please go ahead, sir.

Jeff Misakian - Global VP, IR: Thank you, Danny and good morning, everyone. Welcome to UTi Worldwide's fiscal 2013 fourth quarter results conference call. Joining us on the call today are Eric Kirchner, Chief Executive Officer; and Rick Rodick, Chief Financial Officer. Ed Feitzinger, Executive Vice President, Global Operations is also here and available to answer questions during the Q&A session.

Before we begin the presentation, I would like to point out that certain statements made in today's call are not historical facts. They may be deemed, therefore, to be forward-looking statements under the Private Litigation Reform Act of 1995. Many important factors may cause the Company's actual results to differ materially from those discussed in any forward-looking statements. These risks and uncertainties are described in further detail in the Company's filings with the Securities and Exchange Commission.

Please refer to these filings for more information regarding the risks and uncertainties that the Company faces. UTi undertakes no obligation to publicly update or revise any forward-looking statements, except as a result of new information, future events or otherwise, except as required by law.

Now, I would like to turn the call over to Eric Kirchner. Eric?

Eric Kirchner - CEO: Thank you, Jeff, and good morning everyone. Our fourth quarter results reflect ongoing weakness in the air freight market, reduced activity in contract logistics and very challenging pricing environment while we maintained our focus on expense control, we could not adjust cost quickly enough to respond to the soft market condition and pricing declines. In addition, there were several material unusual items that were recorded in the fourth quarter that Rick will explain shortly. As a result, we reported a loss this morning for the first time since the fourth quarter of fiscal 2009. Clearly, these results are not satisfactory and we are taking a number of steps to address them, which I'll talk about in a minute.

In freight forwarding, air freight tonnage was down slightly in the fourth quarter compared to the same quarter last year. We've not seen any signs of sustainable improvement in the airfreight market. Ocean freight volumes were a bit better in the fourth quarter when compared to last year, particularly in the month of January as a result of the timing of Chinese New Year.

Net revenue per unit of cargo deteriorated in the fourth quarter. On our last earnings call, we told you about the challenges facing the industry with carriers maintaining rates by removing capacity, while competitive pressures were driving down sell rates. In the fourth quarter, buyer rates in certain markets eased slightly. The sell rates declined further due to even tougher pricing conditions. As a result of this pressure, net revenue per kilo in airfreight declined 15% and net revenue per TEU in ocean freight fell 13% in the fourth quarter compared to the same period last year.

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