Driven by new business wins, CEVA Q4 earnings are up in constant currency

Global third-party logistics (3PL) services provider CEVA Logistics said this week that fourth quarter revenue of $2.029 billion was down 1.3 percent annually but up 3.5 percent in constant currency. Adjusted EBITDA, including a pension curtailment, was up 33.9 percent at $75 million.

CEVA officials said that in the fourth quarter the company showed solid gains in the form of higher volumes for the markets it serves, with its Air Freight and Ocean Freight group volumes outpacing the market with a 6 percent gain and 10 percent gains, respectively, coupled with what it said was the successful implementation of new business.

“The Fourth Quarter caps a productive year of building CEVA’s competitive advantage,” said Xavier Urbain, CEO of CEVA, in a statement.  “We enter 2015 with an executive management team of seasoned industry leaders and a go-to-market strategy based upon Business Lines in Freight Management (Air Freight and Ocean Freight) and Contract Logistics to enhance customer value.  On January 1, 2015, we implemented our new local-based operating model to drive operations excellence in our global network and to be a more responsive and innovative partner to our customers.  Our customers’ reaction to our progress is highly positive, as evidenced by Q4’s top line growth.”

A major highlight of CEVA’s fourth quarter performance was its new business wins, which were up 14 percent for all of 2014, with Freight Management wins up 14 percent, and Ocean Freight and Air Freight wins up 30 percent and 14 percent, respectively, while Contract Logistics wins were up 2 percent.

CEVA CFO Rubin McDougal said these gains are encouraging, especially on the air and ocean side, as it highlights how customers have confidence in what CEVA is doing.

“Compared to some of our peers, we are seeing anecdotally that we are outpacing them and doing well,” he said. “Coming off of our recapitalization in 2013 and then refinancing our debt in early 2014, we have left the noise behind us and the market is seeing that what we are doing is working and we are winning new business.”

In the fourth quarter and before that, McDougal said that both the contract logistics and freight management groups were are able to help customers deal with slowdowns occurring at United States West Coast ports.

Many customers, he said, leveraged airfreight services from CEVA to keep freight flows intact that were dealing with the delays resulting from the West Coast ports situation.

CEVA’s Contract Logistics business’ EBITDA was up 6.4 percent in the fourth quarter, with revenue up 1.4 percent in constant currency.

McDougal said this reflects the gains made through the company’s new operating model, which went live on January 1.

The new CEVA operating model is no longer a region-based global structure and is now comprised of an operating model with 17 local geographic clusters of countries with standardized governance and business rules across all clusters, which CEVA said could be made up on one large country like China or several countries in close proximity.

CEVA said this new model drives increased network efficiency and productivity through the elimination of redundant processes, coupled with augmented communication across its business lines. And it added that the transformation is expected to generate annual savings of $50 million to $60 million with a one-time cost of about $30 million that is booked as a specific item.