CEVA releases positive Q1 figures, outlines post-IPO strategy

Less than a month after its initial public offering (IPO) on the Swiss stock exchanges raised about US$1.2 billion for the Dutch logistics firm, CEVA released generally positive figures for the first quarter of 2018, and provided some more details about its partial purchase of French shipping company CMA CGM.

Adjusted earnings before interest, taxes, depreciation and amortizations (EBITDA) grew by $12 million, year-over-years, in Q1 2018, to $66 million, CEVA said, while totals revenues climbed 5.4 percent in the period ending March 31, compared to the same period last year.

The company’s Air Freight sector was particularly strong with an increase in revenues of 21.8 percent, y-o-y, despite volume growth that slowed  by 1.6 percent over the same period, which CEVA said was caused by delays in onboarding new business and “certain contract losses.” Yields, however, rose a healthy 17.1 percent, y-o-y, driven by “better procurement and active margin management,” the company said.

Revenue in CEVA’s Freight Management business reached $803 million in Q1 2018, an increase of 14.4 percent, y-o-y, or 8.7 percent in constant currency, thanks to “good volumes, new business wins and higher freight rates, notably in Air,” the company said. Freight Management EBITDA also increased by $5 million, or 50 percent, y-o-y,  to $15 million, helped by improving yields and continued productivity increases. EBITDA margin also improved by 50 basis points to 1.9 percent in Q1.

“We have further improved productivity and reduced cost,” commented Xavier Urbain, CEO of CEVA Logistics. “The successful IPO opens a new chapter for CEVA. The deleveraged balance sheet and the strategic investment by CMA CGM [representing a 24.99 percent stake in the business] will create important growth opportunities. I am confident that we can further improve margins and deliver significant earnings growth in the years to come – our target is to improve adjusted EBITDA by $100 million in the medium-term.”

With the cash infusion from the April IPO, CEVA  said it has initiated the process of repaying debt with the net proceeds. CEVA recently delivered redemption notices for the 7.0 percent First Lien Loan Senior Secured Notes that were due in 2021, the 9.0 percent Senior Secured Notes due in 2021 and the 12.75 percent Senior Notes due in 2020. The company said it expects Moody’s and S&P Global to update the company’s credit ratings in the next few weeks that will be more reflective of its improved financial position.

CEVA also said plans “to replace the majority of its remaining debt facilities through a comprehensive refinancing package,” comprised of term loans, bonds, revolver and/or asset-backed facilities in U.S. dollars and euros.