CEVA achieved record revenue of 7.22 million euros ($9.28 million) in 2012, a 4.8-percent, year-over-year, growth rate, but took a 21.8-percent hit in its adjusted earnings.
Revenue in freight management ticked up by 6 percent, with strong ocean volumes offsetting weak air freight activity. Even with that bit of good news, the earnings hit darkened the positive results. Freight earnings were down by 17.7 percent due to the modal shift from the air to the water combined with increased competition. Earnings in CEVA’s contract logistics segment, which were down 24.4 percent, were impacted by weak economies around the world.
“These are difficult times for everyone in the global logistics industry, and CEVA has not been immune to those pressures,” Marvin O. Schlanger, CEVA’s chief executive officer, said in a statement. “While our revenue line has been resilient, we have seen a marked deterioration in EBITDA in both our freight management and contract logistics businesses. This simply isn’t good enough, and we have taken action to reverse this decline in profitability. We will continue to take actions necessary to establish satisfactory levels of profitability.”
One of the actions announced today is a debt recapitalization plan aimed at reducing the company’s overall debt and interest costs while strengthening its capital structure and increasing liquidity. Officials said CEVA will benefit from a influx of 205 million euros in cash while seeing net debt decrease by more than 1.2 billion euros and its annual interest cut in half.
The agreement applies to parties that hold more than 83 percent of CEVA’s loans coming due in 2014 and 2020; the parties also hold the majority of a $113 million senior unsecured bridge loan.
Schlanger said the company has been working on the plan with financial advisors for the past few months and a majority of the company’s largest creditors are already on board with the recapitalization program.
“CEVA anticipates a quick resolution to the transaction,” he said, “and will continue to provide customers with the effective and robust supply chain solutions and exceptional levels of service they have come to expect.” - Jon Ross