CEVA Logistics Announces Preliminary Financial Results for 2018
CEVA Logistics AG announced preliminary results for the year ended 31 December, 2018 . This communication is done in the context of the launch of a proposed offering of $825 million in aggregate principle amount of Secured Term Loan B due 2025 in a private transaction in connection with the likely change of control triggered by the Public Tender Offer published by CMA CGM SA on 28 January, 2019.
The year 2018 has been a year of structural changes for CEVA, not least of which was the Company's successful initial public offering on the SIX Swiss Stock Exchange which was followed by a transformational refinancing that saw the Company overhaul its pre-IPO structure, extend maturities and reduce interest costs. Since the transaction, the company has made positive management and organizational adjustments and remains focused on its long-term strategy rather than on short-term performance.
The Company's underlying business has continued to perform in line with expectations in both freight management and contract logistics, albeit various one-time items have significantly impacted profitability in the third and the fourth quarters of the year. In the meantime, new business performance has remained promising with a strong pipeline of new customers as well as new opportunities with existing customers in both Freight Management and Contract Logistics as a positive consequence of the IPO.
CEVA Logistics expects to report revenue growth of approximately 5.2% in 2018 versus the prior year, (by approximately 5.4% in constant currency) to around US$7,356 million of revenues versus US$6,994 million in 2017. Net revenue for 2018 was US$3,629 million. Freight Management revenue growth is estimated at a strong 7.3% (7.2% in constant currency) to approximately US$3,507 million while revenue growth in Contract Logistics is estimated to be 3.3% (3.9% in constant currency ) to approximately US$3,848 million.
The Company anticipates Adjusted EBITDA1 for 2018 to be approximately US$260 million, compared to US$280 million in the prior year. This number includes US$62 million representing CEVA's share of 50% from the Chinese JV Anji CEVA. Whilst CEVA teams have achieved continued progress in productivity, cost reduction and other margin improvement initiatives, EBITDA has been negatively impacted by various one-time adverse events: Contract Logistics issues in Italy in the third quarter as well as some changes in accounting estimates in the fourth quarter reflecting a more conservative approach from management. Without these events, CEVA estimates that Adjusted EBITDA for 2018 would have been approximately US$54 million higher at US$314 million. In addition, CEVA has been facing negative foreign exchange impacts from the BRL, the EUR and the TRY. These events have been mitigated by a capital gain of US$14 million in the Chinese joint venture Anji CEVA Logistics Co. Ltd.
EBITDA (before specific items and share-based compensation) amounted to approximately US$198 million, compared to US$230 million in 2017. This represents an EBITDA margin2 of approximately 2.7%, compared with 3.3% in 2017. Excluding the adverse events CEVA's EBITDA margin would have seen an improvement versus the prior year. EBITDA for Freight Management amounted to US$93 million, up US$17 million versus the prior year and Contract Logistics EBITDA was US$105 million versus US$154 million in 2017. Excluding the impact of the issues in Italy and changes in estimates, Contract Logistics EBITDA would have been US$52 million higher and showing an increase versus the prior year.
CEVA capital expenditures have remained relatively stable at approximately US$109 million in 2018 compared to US$102 million in the prior year. The company anticipates net debt as of 31 December 2018 to be approximately US$1,190 million down 43% compared to US$2,089 million as of 31 December 2017 in line with the significant de-leveraging following the Initial Public Offering. Net working capital in the balance sheet was -2.3% of revenues at the end of 2018.
The publication of CEVA's audited financial results for the year ended 31 December 2018 will be released on 28 February 2019. A conference call will be held at 14:00 CET on this date.
Note: These preliminary results are based on internal management accounts and reflect CEVA's preliminary expectations for its results for the year ended 31