Welcome to the CEVA Holdings LLC Full Year 2015 Investor call. CEVA Holdings LLC 1 March, 2016

Transcription

1 Welcome to the CEVA Holdings LLC Full Year 2015 Investor call CEVA Holdings LLC 1 March, 2016

2 2015 Full Year Results Demonstrate Strength of Operating Model Full Year: Resilience driven by new strategy Operating model delivers strong results, despite volatile economic environment 15 of 17 geographical clusters performed at or above expectations Strong dynamic in Business Development in all target groups Identified further EBITDA improvement opportunities for 2016 Q3: CEVA defends market position in soft markets Focus on valuable sectors and trade lanes Enhanced network efficiencies Best practice sharing across organization Business pipeline results in significant new wins Continued investment in field sales team Q2: Accelerating our progress Continued strong execution with additional benefits Profitability growth Productivity improvements Process enhancements Effective cost control Investment in Sales Impeccable execution Q1: Strong Strategy Execution New operating model successfully implemented Across-the-board progress 2014: Set the Strategy The Right Team The Right Strategy The Right Structure 2 CEVA Holdings LLC Investor call FY 2015

3 2015 Full Year Results Demonstrate Strength of Operating Model Full Year 2015 Revenue of $7.0bn, like-for-like down 0.5% in constant currency Adjusted EBITDA up 22% like-for-like, y-o-y in constant currency Freight Management Full Year 2015 EBITDA of $70m which is an improvement of $53m y-o-y in constant currency - Freight Management margin improved 150 basis points y-o-y - Air Freight volumes up 2% y-o-y; weak peak season in Q Ocean Freight volumes down 6% y-o-y - Optimization of attractive trade lanes as well as system enhancements, process improvements and cost control contributed significantly - Reinforcement of Ocean team; revitalized focus on Ground transport optimization Contract Logistics Adjusted EBITDA margin of 5.5% improvement of 30bps y-o-y - Contract Logistics Full Year revenue is up 1.5% like-for-like, y-o-y in constant currency - Major customer wins in Consumer & Retail and Healthcare - Strong development of the 4PL activity - Major investment in best practices, benchmarking, KPI s Strong overall business pipeline up 12% y-o-y - Y-o-y hit rate 21% Contract Logistics, 28% Freight Management - Field sales team grown by 45% y-o-y, resulting in significant new business wins 3 CEVA Holdings LLC Investor call FY 2015

4 Market trends Soft GDP growth in Q vs Q4 2014: 1.8% Euro zone, 1.8% US, 6.0% China Industrial production weak: index change y-o-y: -0.9%, +1.3% EU, +5.6% China Between Q and Q4 2015, USD strengthened significantly against other currencies: 4% against the British Pound 14% against the Euro 29% against the Turkish Lira 51% towards the Brazilian Real Ocean Air Container volumes down (-1% average in Sept/Oct) Freight rates remain low: Shanghai Container freight index -41% y-o-y in December Oversupply situation to remain (7% gap between supply and demand growth) in spite of industry consolidation Air cargo volumes mostly flat: y-o-y -1.2% in Nov, +0.8% in Dec Short and weak peak season Air freight rates still ~15% below previous year Flat growth and pressure on rates expected for 2016 Contract Logistics Car sales of domestic products down 0.8% in USA Inventory levels remain high with low turnover 4 CEVA Holdings LLC Investor call FY 2015 Sources : Drewry (Ocean, Air), Thomson Reuters

5 Top line drivers Gross Revenue (USD million) Adjusted EBITDA* (USD million) % % % % 2014A Disposal Growth Rate/Fuel Impact Currency Impact 2015A 2014A Disposal Growth Currency Impact 2015A Gross revenue flat at constant currency Adjusting for Air and Ocean Freight rate and fuel decline, y-o-y growth rate would have been flat *Adjusted EBITDA includes the Group s share of the adjusted EBITDA of Anji-CEVA EBITDA up 22% at constant currency Visible impact of ongoing streamlining of processes and focus on profitability Y-o-y volumes for Air increased by 2% and Ocean yield improved 5 CEVA Holdings LLC Investor call FY 2015

6 Forwarding volumes: CEVA maintaining yields Quarterly volume growth (y-o-y, %) Yield* (Net revenue/t or TEU, $) AIR Q Q Q Q Q Q Q Q Q Q OCEAN NA Q Q Q Q Q Q Q Q Q Q *yield per t (air) or TEU (ocean) Sources : CEVA, Air market : IATA, Ocean market : Drewry CEVA Holdings LLC Investor call FY 2015 CEVA 2015 current quarter CEVA 2015 Market

7 Cluster profitability improvement First full year of cluster structure Implementation and adaption to new structure happened in months, not years 15 out of 17 clusters performed at or above expectations Some examples: - China and Germany improved profitability by >100% - United Kingdom significant wins in Contract Logistics in second half of CEVA Holdings LLC Investor call FY 2015

8 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Pipeline consistently above prior year with significant deals Freight Management New business pipeline ($3,596 million) In December 2015 FM new business pipeline decreased slightly (-1%) but continued to stay or relatively high level and was 12% above prior year YTD hit rate of 28% with substantial Q wins valuing $371 million Contract Logistics New business pipeline ($1,416 million) CL pipeline continued to show growing trend and increased further in December to be 14% higher y-o-y Significant Auto and Consumer & Retail opportunities YTD hit rate at 21%, with significant long term wins, positioning us well for CEVA Holdings LLC Investor call FY 2015

9 2015 Full Year $ millions Revenue* 1 Adjusted EBITDA** 1 7,864 7, Revenue* and Adjusted EBITDA** 2 Actual Actual Difference % YTD 2014 YTD 2015 '15 vs '14 '15 vs '14 Freight Management 3,648 3,318 (330) (9.0%) Contract Logistics 4,216 3,641 (575) (13.6%) Revenue* 7,864 6,959 (905) (11.5%) Freight Management % Contract Logistics (18) (8.2%) Adjusted EBITDA** % Freight Management 0.6% 2.1% Contract Logistics 5.2% 5.5% Adjusted EBITDA (Margin) 3.1% 3.9% * Reported revenue excludes the revenues generated by Anji-CEVA and includes business disposal (2014: $107 at actual FX rates) **Adjusted EBITDA includes the Group s share of the adjusted EBITDA of Anji-CEVA and includes business disposal (2014: $3 million at actual FX rates) Highlights Productivity increases and effective transportation procurement drive 150 bps improvement in Freight Management EBITDA margin Challenging market conditions resulted in reduction in Contract Logistics EBITDA margin Increased focus on tradelane management contributed to strong Freight Management EBITDA increase for tough volumes environment however net positive offset by rates ¹ Figures at constant currency ² Figures at actual fx rates 9 CEVA Holdings LLC Investor call FY 2015

10 Cash flow Full Year 2015 Excellent operating free cash flow for the year Strong working capital performance Continued investment through net capital expenditure to support customer growth Divestment relates to the sale of SITTAM in Q Anji-CEVA dividends phased differently 2014 Specific items include expenses related to implementation of the cluster structure Actual Actual $ actual fx rate EBITDA before specific items* Retirement benefit obligations (10) (5) Provisions (11) (2) Change in working capital - 11 Other (17) 2 Specific items (excl management fees) (64) (22) Tax (29) (22) Dividends received 18 - Net capital expenditure (63) (89) Free cash flow Net financing cost (229) (166) Cash flow before divestments (199) (60) Net proceeds from sale of PP&E 8 6 Divestments - 20 Net fund movement (191) (34) *Excludes Anji for cash flow purposes 10 Working capital is defined as inventory, trade and other receivables and trade and other payables (excluding accrued interest, FX movements, interest/ non-trade movements and movements on tax balances) CEVA Holdings LLC Investor call FY 2015

11 Net working capital End of period Trend ($ millions) $ actual fx rate 31 Dec Dec 2015 Inventory Trade and other receivables 1, Prepayments, Accrued income and Income tax receivable Total Receivables 1,407 1,166 Trade and other payables 1,467 1,284 Provisions and Income tax payable Total Payables 1,577 1,362 NWC* (170) (196) NWC (excl accrued interest) (147) (173) NWC % of FY revenue (LTM) (2.2)% (2.8)% Net working capital continues to be tightly controlled and maintained as a source of cash *Refers to working capital inclusive of tax balances, miscellaneous receivables/payables and effects of foreign exchange 11 CEVA Holdings LLC Investor call FY 2015

12 Debt $ actual FX rates 31 December December 2015 Cash and cash equivalents (386) (309) Term Loans due March US ABL Facility due December Australian Receivables Facility due September % Senior Secured Notes due December % First Lien Senior Secured Notes due March % Senior Secured Notes due May 2018 * Finance Leases and Other Secured Debt Net First-Lien Debt 1,375 1, % 1.5 Lien Priority Lien Notes due September Net Secured Debt 1,700 1, % Senior Notes due March Other Debt Net Operating Debt 1,881 1,897 * 4% Senior Secured Notes is at principal value (Principal Value: $390m; Carrying Value: $362m) 12 CEVA Holdings LLC Investor call FY 2015

13 Liquidity/Headroom $ actual fx rate 31 December December 2015 Total cash and cash equivalents Availability under committed credit facilities Total headroom CEVA Holdings LLC Investor call FY 2015

14 Maturity Profile $ actual FX rate 1, Australian ABL renewed, maturity extended to 2020 No material maturities until 2018 Weighted Average Period to Maturity is 4.6 years 14 CEVA Holdings LLC Investor call FY 2015

15 2015: Wrap-up Full Year results demonstrate strength of the CEVA operating model In face of volatile market conditions, a robust Q of 17 clusters well on track Freight Management s strategic procurement approach in low-rate environment contributed to margin improvements - Optimization of attractive trade lanes, system enhancements, process improvements and cost control - Revitalized Ocean team; refocus on Ground CL continues its focus on driving productivity through best practices and benchmarking - Major customer wins in Consumer & Retail and Healthcare strong development of 4PL activity Challenging market expected to continue, but we are well positioned 15 CEVA Holdings LLC Investor call FY 2015

16 Appendices to Q4 earnings call Full Year 2015

17 Appendix A Q QTD $ millions Revenue* 1 Adjusted EBITDA** 1 2,029 1, Revenue* and Adjusted EBITDA** 2 Actual Actual Difference % Q Q '15 vs '14 '15 vs '14 Freight Management (143) (14.8%) Contract Logistics 1, (165) (15.5%) Revenue* 2,029 1,721 (308) (15.2%) Freight Management % Contract Logistics (9) (15.0%) Adjusted EBITDA** (9) (12.0%) Highlights Freight Management maintained a steady EBITDA margin y-o-y, despite challenging market conditions Contract Logistics revenue at constant currency is marginally lower y-o-y, factoring in the SITTAM disposal effect, but the 2016 outlook is positive, with several wins achieved in Q EBITDA margin remained robust through SG&A savings Freight Management 1.6% 1.8% Contract Logistics 5.6% 5.7% Adjusted EBITDA (Margin) 3.7% 3.8% *Reported revenue for Q excludes revenues generated by Anji-CEVA and includes business disposal ($40 million at actual FX rates) **Adjusted EBITDA for Q includes the Group s share of the adjusted EBITDA of Anji-CEVA and includes business disposal ($1 million at actual FX rates) ¹ Figures at constant currency ² Figures at actual fx rates 17 CEVA Holdings LLC Investor call FY 2015

18 Appendix B Cash flow Q Strong working capital performance Continued investment through net capital expenditure to support customer growth 2014 Specific items include expenses related to the implementation of the cluster structure Actual Actual $ actual fx rate Q Q EBITDA before specific items* Retirement benefit obligations (3) - Provisions (3) (4) Change in working capital Other 20 8 Specific items (excl management fees) (43) (3) Tax (7) (6) Net capital expenditure (19) (30) Free cash flow Net financing cost (49) (43) Cash flow before divestments Net proceeds from sale of PP&E 6 1 Net fund movement *Excludes Anji-CEVA for cash flow purposes 18 Working capital is defined as inventory, trade and other receivables and trade and other payables (excluding accrued interest, FX movements, interest/ non-trade movements and movements on tax balances) CEVA Holdings LLC Investor call FY 2015

19 Appendix C Current method vs proposed method $ millions Proposal to adjust external segment reporting method as from Q with minor impact on comparatives This change illustrates that 2015 on 2014 EBITDA evolution of the segments was impacted by allocation of general overhead and the elimination of the regional structure. Like-for-like, the adjustment for 2015 of $4 million between Contract Logistics and Freight Management would in 2014 have worked out in the opposite way. The Contract Logistics evolution 2015 on 2014, therefore is understated with approx. $8 million, whilst the Freight Management sector shows the opposite effect Comparatives will be adjusted in external reporting as from Q reporting Continue to report two operating segments (Contract Logistics and Freight Management) Continue to allocate SG&A to the two operating segments for external reporting Impact of proposed segmentation model on Full Year ¹ Figures at actual fx rates Current Proposed Difference % FY 2015 FY 2015 '15 vs '15 '15 vs '15 Freight management 3,318 3,184 (134) (4.0%) Contract logistics 3,641 3, % Revenue before specific items 6,959 6, % Freight management (4) (5.7%) Contract logistics % Adjusted EBITDA % Freight management 2.1% 2.1% Contract logistics 5.5% 5.5% Adjusted EBITDA (Margin) 3.9% 3.9% 19 CEVA Holdings LLC Investor call FY 2015

20 Appendix C Current method vs proposed method QTD per quarter - $ millions Impact of proposed segmentation model on Q Current Proposed Difference % Q Q '15 vs '15 '15 vs '15 Freight Management (32) (3.8%) Contract Logistics % Revenue before specific items 1,776 1, % Freight Management % Contract Logistics (2) (4.3%) Adjusted EBITDA % Freight Management 0.6% 0.9% Contract Logistics 4.9% 4.5% Adjusted EBITDA (Margin) 2.9% 2.9% ¹ Figures at actual fx rates Impact of proposed segmentation model on Q Current Proposed Difference % Q Q '15 vs '15 '15 vs '15 Freight Management (37) (4.5%) Contract Logistics % Revenue before specific items 1,699 1, % Freight Management (1) (3.8%) Contract Logistics % Adjusted EBITDA % Impact of proposed segmentation model on Q Current Proposed Difference % Q Q '15 vs '15 '15 vs '15 Freight management (38) (4.5%) Contract logistics % Revenue before specific items 1,763 1, % Freight management (4) (16.7%) Contract logistics % Adjusted EBITDA % Freight management 2.9% 2.5% Contract logistics 5.5% 5.7% Adjusted EBITDA (Margin) 4.3% 4.3% Impact of proposed segmentation model on Q Current Proposed Difference % Q Q '15 vs '15 '15 vs '15 Freight Management (27) (3.3%) Contract Logistics % Revenue before specific items 1,721 1, % Freight Management (1) (6.7%) Contract Logistics % Adjusted EBITDA % Freight Management 3.2% 3.2% Contract Logistics 6.2% 6.0% Adjusted EBITDA (Margin) 4.7% 4.7% ¹ Figures at actual fx rates 20 CEVA Holdings LLC Investor call FY 2015 Freight Management 1.8% 1.8% Contract Logistics 5.7% 5.6% Adjusted EBITDA (Margin) 3.8% 3.8%

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22 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, its liquidity and capital resources, its guidance for 2016 and beyond and the other non-historical 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. CEVA Holdings LLC Investor call FY 2015