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UTi Worldwide loss as CEO resigns

PRESS RELEASE

December 08, 2014: UTi Worldwide Inc. (Nasdaq:UTIW) today announced that Eric W. Kirchner has resigned as Chief Executive Officer and as a member of the Board of Directors of the Company. The Board has appointed Edward G. Feitzinger, 47, as CEO of the Company and elected him as a member of the board as a Class B director, effective immediately.

Mr. Feitzinger has been with the Company since 2010. He has served as Executive Vice President-Global Operations since 2012 and previously served as Executive Vice President-Global Contract Logistics and Distribution.

December 09, 2014: UTi Worldwide Inc. today reported financial results for its fiscal 2015 third quarter ended October 31, 2014. Fiscal Third Quarter 2015 vs. 2014 Results: Revenues were $1,078.3 million, a decrease of 6.6 percent from $1,154.4 million. Net revenues (revenues minus purchased transportation costs) were $381.0 million, a decrease of 3.1 percent from $393.5 million.

On a constant currency basis, revenues decreased 4.3 percent and net revenues increased 0.1 percent versus the comparable prior year period.

Net loss attributable to UTi Worldwide Inc. was $34.0 million in the fiscal 2015 third quarter. Net loss attributable to common shareholders after dividends on preferred stock was $0.35 per diluted common share.

Net loss attributable to UTi Worldwide Inc. in the fiscal 2014 third quarter was $9.1 million, or $0.09 per diluted common share.

The company recorded severance and other costs of $23.7 million compared to $13.2 million. The $23.7 million includes a $19.6 million receivable impairment resulting from a customer bankruptcy. In addition, UTi recorded additional tax expense exceeding its normalized tax rate of $7.0 million, or $0.06 per diluted common share.

Non-GAAP net loss attributable to UTi Worldwide Inc. was $4.8 million. Non-GAAP net loss attributable to common shareholders after preferred stock dividends was $0.08 per diluted common share.

Earnings before interest, taxes, depreciation and amortization, as adjusted for severance and other costs (adjusted EBITDA), totaled $23.1 million (which includes $11.3 million in temporary costs) compared to $39.8 million.

All references to adjusted items, free cash flow (defined as cash flow from operations less net capital expenditures), constant currency items, EBITDA and adjusted EBITDA in this release refer to non-GAAP results. A reconciliation of these non-GAAP results to the most directly comparable financial measures calculated in accordance with GAAP is provided in the supplemental financial information attached to this release.

Edward G. Feitzinger, chief executive officer, said, "Earlier this year, we were working through service issues and billing challenges associated with the rollout of our freight forwarding system in the United States. Since then, our service has improved dramatically.

"These past issues adversely impacted freight forwarding growth and free cash flow for several quarters. The third quarter marked a turning point in a number of areas. Airfreight kilos improved on a year over year basis for the month of October and adjusted EBITDA improved each month during the quarter. Free cash flow also turned positive in a quarter where we have historically had negative cash flow. In addition, by the end of Q3 we had completed approximately half of our previously announced incremental $45 million annualized cost savings target for fiscal year 2015. These actions, together with growth initiatives and other improvements, give us confidence in our previously-stated fiscal 2016 adjusted EBITDA target of $190 million to $210 million."

"In the third quarter, adjusted EBITDA decreased approximately $17 million as compared to the same period last year, primarily due to lower freight forwarding revenues and $11 million in temporary costs. Contract logistics and distribution adjusted EBITDA was flat on a year over year basis, but the results were negatively impacted by new business start-ups and the timing of project related work. Adjusted EBITDA in freight forwarding declined primarily due to lower air freight volumes and costs related to transformation."

Operating expenses less purchased transportation costs were $403.2 million in the third quarter of fiscal 2015. Excluding severance and other costs, adjusted operating expenses less purchased transportation costs were $379.6 million, compared to $373.1 million in the same period last year.

The company recorded a tax provision of $2.3 million in the fiscal 2015 third quarter on a pretax loss of $33.0 million, due to increases in valuation allowances and the mix of taxable income across the company's tax jurisdictions.

Free cash flow was positive $8.5 million in the fiscal 2015 third quarter, which represents a $48 million improvement as compared to the same quarter last year. Richard G. Rodick, chief financial officer, said, "We improved our free cash flow significantly in the fiscal 2015 third quarter. As a result, the fiscal 2015 third quarter was our first positive free cash flow period in seven quarters, and better than any third quarter since fiscal 2012. We continue to believe that positive free cash flow for the full fiscal year is achievable, and we have additional incremental opportunity in fiscal 2016."

The company recorded a $19.6 million receivable impairment in the fiscal 2015 third quarter relating to a customer bankruptcy. The total amount owed to the company is $24.9 million. The company filed an insurance claim for approximately $16 million under the terms of a policy related to a portion of the impaired amount. The company's insurance provider has not yet accepted or rejected the claim. The company believes that a substantial portion of the claim will eventually be paid, but as required under GAAP, the company has not recognized any benefit from its potential insurance recovery.

 

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