CEVA Logistics AG - Investor Presentation...continues to be negatively impacted by the performance...

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CEVA Logistics AG – Q1 2019

CEVA Logistics AG – Investor CallFirst Quarter 2019

30 April 2019

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Agenda

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Highlights1

Q1 2019 Financial Results3

Business Update2

Outlook4


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Revenue declined by 5.1% year-on-year due to negative translation of foreign currencies

(BRL, TRY , EUR and AUD mainly into USD) while in constant currency revenue increased by

1.1% driven by strong volume growth in Ocean Freight

Net Debt2 down 43.2% to US$1,266 million as of 31 March 2019, compared to US$2,228

million as of 31 March 2018 in line with the significant de-leveraging following the IPO

Adjusted EBITDA2 of US$47 million; EBITDA1,2 of US$36 million, a margin of 2.1%. EBITDA

continues to be negatively impacted by the performance in Contract Logistics in Italy as

the contract issues are in the process of being solved whilst an additional provision of

US$10 million was created for one challenging contract

Strong new business momentum

CMA CGM Public Tender Offer resulted in 97.89% ownership in CEVA’s equity. After the

PTO, CMA CGM purchased additional shares of CEVA on the market and now holds more

than 98% of CEVA’s shares: CMA CGM intends to file a squeeze out procedure for CEVA

shares.

Highlights First Quarter 2019

3 1 Before specific items and Share-Based Compensation (SBC)2 On a pre-IFRS 16 basis


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CMA CGM Log - a middle-size freight forwarding platform

Created in 2015, CMA CGM Log comprises all freight forwarding activities of CMA

CGM

Significant sea freight forwarding platform with 480k TEUs of which 170K controlled TEUs annually

2018E Revenues of ca. $630m and EBITDA of ca. $16m (2.5% EBITDA margin)

Global footprint with presence in 32 countries through directly-owned entities with a significant

presence in growing markets including China, India, Australia and USA

Well-balanced customer portfolio with over 15,000 customers

~1,200 employees

CMA CGM Log – high complementarity with CEVA current business

Acquisition of CMA CGM Log addresses CEVA’s needs to reach critical size and expand

its product offering in priority segments such as:

Sea-FCL and Sea-LCL freight forwarding

Air freight forwarding

Customs clearance

Carrier haulage

4

Acquisition of CMA CGM Log

Acquisition due to close on 2 May, 2019


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Business Development Momentum

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CEVA experienced continued strong momentum with new business wins up

12% in the first quarter of 2019

Significant new contracts and extensions were won in the first three months:

CEVA has won Automotive contracts in Benelux, Asia and Americas regions,

Consumer & Retail in North America, IMEA and Asia regions, as well as

Technology and Industrial contracts in North America

The partnership with CMA CGM is also delivering additional revenues


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Agenda

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Highlights1


Business Update2

Outlook4


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Business line overview: Freight Management

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Quarter ending 31 March

(in US$ m unless otherwise stated)

Q1 2019 YoY

Air tonnes (‘000) 100 -6.9%

Air NR/t (US$) 806 +7.6%*

Ocean TEUs (‘000) 193 +6.2%

Ocean NR/TEU (US$) 288 +0.7%*

Revenue 797 +3.8%*

EBITDA1 13 -7.1%*

EBITDA Margin 1.6% -20 bps*

Q1 2019 Highlights

Air

Air volumes decreased by 6.9% mainly from earlier loss

of certain customers (portfolio cleaning) and selective

approach to new business. Yield up 7.6%. Major

regions impacted are Americas and APAC

Global Operator productivity (files handled per

Operator) up by 3.0% vs. Q1 2018

Ocean

Good volumes with significant growth out of Americas

and APAC

Productivity gains through increased focus and

standardization: Files/Operator ratio improved by 3.5%

relative to same period last year

Ground

Continuing cost of transportation challenges in North

America and flat development of shipments year-over-

year. Blended cost per mile up 1.8%

Other FM

VAS : EBITDA 50% better than last year

* At constant FX1 Before specific items and Share-Based Compensation (SBC) and on a pre-IFRS 16 basis


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Quarterly Air and Ocean Volume and Yield Development

8

10.2

1.6

-1.3 -0.2-2.4

-6.9

-1 to -2%

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 MarketQ1 19*

626789 732 678 648

806

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19

6.9 8.5 8.36.3

8.96.2

~3%

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 MarketQ1 19*

266303 292 281

246288

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19

Air Yield: Net Revenue/t (US$)1Air export volumes (t) quarterly growth (YoY, in %)

Ocean Yield: Net Revenue/TEU (US$) 1Ocean volumes (TEU) quarterly growth (YoY, in %)

Volumes (thousand t) 129.6 107.3 120.2 122.6 126.5 99.9

Volumes (thousand TEU)

189.1 181.6 194.9 204.5 205.6 192.9

* Company’s estimate 1 At actual FX


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Q1 2019 Highlights

• Revenue was negatively impacted by loss of major, low

margin, Supply Chain Service contract in North America

• Partly off set by improved volumes in existing contracts

and implementation of new businesses, e.g., Consumer

and Retail, e-commerce, Healthcare and Automotive

• Pricing and operational improvement initiatives in some

geographies

• Unexpected factory shutdowns affecting major

automotive contracts are negatively impacting

performance in Europe

• Italy: one of the difficult publishing contracts continues

to negatively affect performance. Expected price

renegotiations progressing

• An additional provision of US$10 million was created for

one Italian contract

Business line overview: Contract Logistics

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Q1 2019 YoY %

Revenue 901 -1.1%*

EBITDA1 23 -36.1%*

EBITDA Margin 2.6% -140 bps*

* At constant FX1 Before specific items and Share-Based Compensation (SBC) and on a pre-IFRS 16 basis


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Anji CEVA Business Performance

Revenues up 13.2% in Q1 2019 in constant currency to US$369 million

- Automotive Division: Revenue up 14% in constant currency as a result of

growth on auto aftermarket and new wins on ground transportation

- Non-Automotive Division up 2% due to new wins and growth on existing

contracts

Q1 2019 EBITDA1 was US$22 million (CEVA’s share of EBITDA US$11 million), a

margin of 6.0%.

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1 On a pre-IFRS 16 basis


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Agenda

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Highlights1


Business Update2

Outlook4


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Group P&L

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All figures above EBITDA are before specific items and SBC1

Revenue declined by 5.1% YoY due

to negative translation of foreign

currencies (BRL, TRY , EUR and

AUD mainly into USD) while in

constant currency revenue

increased by 1.1%

EBITDA continues to be negatively

impacted by the performance in

Contract Logistics in Italy as the

contract issues are in the process

of being solved whilst an

additional provision of US$10

million was created for one

contract

Specific Items: higher external

advisory costs in relation to

strategic projects (up US$10m) and

share-based compensation (up

US$2m) whilst other costs reduced

(down US$3m).



Q1 2019Reported

IFRS 16Impact

Q1 2019Pre-

IFRS 16

Q1 2018Reported

Delta YoY,

Pre-IFRS 16

Revenue 1,698 - 1,698 1,790 -5.1%

Net Revenue 874 - 874 915 -4.5%

Operating Expenses (740) 98 (838) (862) -2.8%

EBITDA before specific items & SBC1 134 98 36 53 -32.1%

EBITDA Margin 7.9% 5.8% 2.1% 3.0% -90 bps

Specific items and SBC (16) - (16) (7) (9)

Depreciation & Amortization (112) (92) (20) (36) 16

Net Finance Expense (41) (10) (31) (76) 45

Net Result from joint venture 3 - 3 5 (2)

Tax (6) - (6) (6) -

Net Income (38) (4) (34) (67) 33

Share in Anji-CEVA EBITDA 13 2 11 13 (2)

Adjusted EBITDA2 147 100 47 66 -28.8%

Comments

1 SBC: Share-Based Compensation 2 Adjusted EBITDA includes the Group’s share of EBITDA from the Anji-CEVA joint venture, and excludes specific items and SBC


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Results Freight Management

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Q1 2019Pre-IFRS 16

Q1 2018Reported

Delta YoY, Pre-IFRS 16

Delta YoYat constant

FXPre-IFRS 16

Revenue 797 803 -0.7% +3.8%

Air 314 338 -7.1% -2.5%

Ocean 276 254 +8.7% +15.5%

Other FM 207 211 -1.9% +0.5

Net Revenue 218 224 -2.7% +1.9%

Operating Expenses (205) (209) -1.9% +2.5%

EBITDA1 13 15 -2 -1

EBITDA Margin 1.6% 1.9% -30 bps -20 bps

1 Before specific items and Share-Based Compensation (SBC)


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Results Contract Logistics

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1 Before specific items and Share-Based Compensation (SBC)



Q1 2019Pre-IFRS 16

Q1 2018Reported


Delta YoYat constant

FXPre-IFRS 16

Revenue 901 987 -8.7% -1.1%

Net Revenue 656 691 -5.1% +1.5%

Operating Expenses (633) (653) -3.1% +3.8%

EBITDA1 23 38 -15 -13

EBITDA Margin 2.6% 3.9% -130 bps -140 bps


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Results Anji-CEVA – not consolidated

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Strong revenue growth from existing contracts and new wins, including +14% in automotive and +2% in non-automotive divisions



Q1 2019Reported

IFRS 16Impact

Q1 2019Pre-IFRS 16

Q1 2018Reported


Delta YoY,at constant

FX Pre-IFRS 16

Revenue 369 - 369 346 +6.6% +13.2%

EBITDA 26 4 22 25 -3 -2

EBITDA Margin 7.0% 1.0% 6.0% 7.2% -120 bps -140 bps

Net Income 10 - 10 13 -3 -2

CEVA’s share of EBITDA 13 2 11 13 -2 -1


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Specific Items affecting EBITDA

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Specific Items: higher external advisory costs in relation to strategic projects ( up US$10 million) and share-based compensation (up US$2 million) whilst other costs reduced (down US$3 million)



Q1 2019Reported & Pre-IFRS 16

Q1 2018Reported & Pre-IFRS 16

Delta YoY, Reported & Pre-IFRS 16

Restructuring - 2 -2Advisor costs 12 2 10Sub-Total excl. IPO/ Refinancing 12 4 8

IPO and refinancing costs affecting EBITDA

(1) - -1

Share-based compensation (non-cash)

5 3 2

Total Specific Items and SBC 16 7 9


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Cash Flow

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Q1 2019Reported

IFRS 16Impact

Q1 2019Pre-

IFRS 16

Q1 2018Reported

Delta YoY, Pre-IFRS

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EBITDA after specific items and SBC

118 98 20 46 (26)

Change in working capital (54) - (54) (122) 68

Other 10 - 10 9 1

Operating cash flow 74 98 (24) (67) 43

Net finance expenses (45) (10) (35) (36) 1

Tax (10) - (10) (6) (4)

Capital expenditure (19) - (19) (21) 2

Dividends received - - - - -

Free cash flow 0 88 (88) (130) 42

Proceeds from sale of PP&E - - - - -

Net Fund movement 0 88 (88) (130) 42

Operating cash flow improved by US$ 43 million mainly as a result of improved working capital (additional inflow of US$68 million), partly offset by decrease in EBITDA after specific items and SBC (down by US$26 million)

Working capital outflow decreased by US$68 million quarter on quarter as a result of strong collection performance for accounts receivables

Comments


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Net Working Capital

Net Working Capital structurally negative

Increase in Q1 less than prior years due

to increased management focus

Strong collection performance for Q1

despite last 2 days being a weekend

Focus on underlying structural

improvements continues:

- terms, collection performance and

payables

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$ million

NWC Evolution (end of period)

(300)

(250)

(200)

(150)

(100)

(50)

0

Q4 Q1 Q2 Q3

2017 2018 2019

(1.7)%

(2.2)%

(1.5)%

(2.4)%

(2.0)%

(1.2)%

(2.2)%

(3.2)%

(3.6)%

as % of LTM

Revenue

as % of LTM

Revenue

as % of LTM

Revenue

(2.7)%


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Debt Refinancing

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CMA CGM has entered into a commitment letter with certain banks, which agreed to underwrite financing for CEVA in an amount of up to US$825 million (the ‘Backstop Facility’) to provide certainty for CEVA in respect of the change of control clauses in its US$475 million Term Loan B agreement and in its €300 million Senior Notes Indenture

US$475 million Term Loan B due 2025

€300 million 5.25% Senior Notes due 2025

US$585 million Senior Revolving Credit & Ancillary Facility due 2023

The change of control clause in CEVA’s Term Loan B agreement was triggered on 16 April 2019. prior to this, in February 2019, a new Term Loan B (‘TLB’) in the amount of US$475 million was agreed. The old TLB was then prepaid on 24 April 2019, with the new TLB being issued on the same date. The new TLB has an interest rate of LIBOR + 5.00% with an original issue discount of 3%

The change of control clause in CEVA’s Revolving Credit Facility (‘RCF’) was triggered on 16 April 2019. Nine of the 11 bank lenders consented to the change of control. Supported by CMA CGM, CEVA is in discussions with a number of banks who are interested in joining the RCF.

The change of control clause in CEVA’s Notes indenture was triggered on 13 March 2019. CEVA is currently working on a solution for its Senior Notes, but in any event the refinancing of the Notes is covered by the Backstop Facility.


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Agenda

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Highlights1


Business Update2

Outlook4


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Outlook 2019

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2019 expected to be in line with our medium-term

objectives with medium-term EBITDA margin target of

4.5%-5.0% confirmed and growth above market resulting in

a target Adjusted EBITDA of US$470-490 million in 2021

(pre-IFRS 16 implementation)

New sales organization now in place to build on positive

momentum in Q1 and deliver strong growth

Commitment to the strategic plan – focus remains on

sustainable profitability and improved free cash flow

Ongoing reorganization of CEVA with the new centralized

management team at the HQ level, dedicated to the CEVA’s

transformation

Appendix


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Balance sheet

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US$ million 31.03.2019 31.12.2018

Assets

Property, plant and equipment 173 175

Right-of-use assets 1,136 -

Goodwill 1,322 1,320

Other intangibles 56 57

Others 334 335

Non-current assets 3,021 1,887

Trade receivables 1,087 1,136

Cash and cash equivalents 360 368

Others 268 224

Current assets 1,715 1,728

Total assets 4,736 3,615

US$ million 31.03.2019 31.12.2018

Liabilities and equity

Equity (parent company) 226 244

Non-controlling interests 1 1

Total equity 227 245

Borrowings 1,038 1,519

Lease liability 863 -

Others 247 272

Non-current liabilities 2,148 1,791

Borrowings 555 41

Lease liability 331 -

Trade and other payables 1,308 1,387

Others 167 151

Current liabilities 2,361 1,579

Total liabilities and equity 4,736 3,615

All figures in actual currency- 2019 follows IFRS 16


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Debt maturity profile

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All figures in US$ million at actual Fx rates

337394 382

473

9416

20242019* 2020** 2021 20252022 2023***

Undrawn Drawn

* Includes EUR 300M of Senior Notes maturing 2025 which has a Change of Control clause and so is treated as short term at Q1, but is expected to be refinanced in Q2

** Includes Securitisation and ABL facilities. Refinancing of these facilities is in progress, with the maturity expected to be extended as a result of the refinancing

*** Total Facility is USD 585M, of which USD 108M allocated to Guarantee Facilities


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Quarterly financial performance – actual currency

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2018 figures in actual currency

1 Excluding specific items and share-based compensation; pre IFRS 16 basis2 Adjusted EBITDA includes the Group’s share of Anji-CEVA but excludes specific items and share-based compensation; pre IFRS 16 basis

2019 ($ million) 2018 ($ million) Delta YoY, Pre-IFRS 16 (percent)

Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD

Freight Management

Revenue 797 - - - 797 803 - - - 803 (0.7) - - - (0.7)

Net Revenue 218 - - - 218 224 - - - 224 (2.7) - - - (2.7)

EBITDA1 13 - - - 13 15 - - - 15 (13.3) - - - (13.3)

Contract Logistics

Revenue 901 - - - 901 987 - - - 987 (8.7) - - - (8.7)

Net Revenue 656 - - - 656 691 - - - 691 (5.1) - - - (5.1)

EBITDA1 23 - - - 23 38 - - - 38 (39.5) - - - (39.5)

Group

Revenue 1,698 - - - 1,698 1,790 - - - 1,790 (5.1) - - - (5.1)

Net Revenue 874 - - - 874 915 - - - 915 (4.5) - - - (4.5)

EBITDA1 36 - - - 36 53 - - - 53 (32.1) - - - (32.1)

Adjusted EBITDA2 47 - - - 47 66 - - - 66 (28.8) - - - (28.8)


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Quarterly financial performance – Constant 2019 currency

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2018 figures in constant currency

2019 ($ million) 2018 ($ million) Delta YoY, Pre-IFRS 16 (percent)

Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD

Freight Management

Revenue 797 - - - 797 768 - - - 768 3.8 - - - 3.8

Net Revenue 218 - - - 218 214 - - - 214 1.9 - - - 1.9

EBITDA1 13 - - - 13 14 - - - 14 (7.1) - - - (7.1)

Contract Logistics

Revenue 901 - - - 901 911 - - - 911 (1.1) - - - (1.1)

Net Revenue 656 - - - 656 646 - - - 646 1.5 - - - 1.5

EBITDA1 23 - - - 23 36 - - - 36 (36.1) - - - (36.1)

Group

Revenue 1,698 - - - 1,698 1,679 - - - 1,679 1.1 - - - 1.1

Net Revenue 874 - - - 874 860 - - - 860 1.6 - - - 1.6

EBITDA1 36 - - - 36 50 - - - 50 (28.0) - - - (28.0)

Adjusted EBITDA2 47 - - - 47 62 - - - 62 (24.2) - - - (24.2)

1 Excluding specific items and share-based compensation; pre IFRS 16 basis2 Adjusted EBITDA includes the Group’s share of Anji-CEVA but excludes specific items and share-based compensation; pre IFRS 16 basis


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This news release contains specific forward-looking statements. These forward-looking statements include, but are notlimited to, discussions regarding the proposed private offering of the Notes described above, its guidance for 2018 andbeyond, discussions regarding industry outlook, CEVA's expectations regarding the performance of its business or jointventures, its liquidity and capital resources, and other non-historical statements. These statements can be identified by theuse 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 andbeliefs only as of the date of this news release and, in addition to the assumptions specifically mentioned in the aboveparagraphs, there are a number of factors that could cause actual results and developments to differ materially from thoseexpressed or implied by these forward-looking statements, including the effect of local and national economic, credit andcapital market conditions, a downturn in the industries in which we operate (including the automotive industry and the airfreight business), risks associated with CEVA's global operations, fluctuations and increases in fuel prices, CEVA's substantialindebtedness, restrictions contained in its debt agreements and risks that it will be unable to compete effectively. Furtherinformation concerning CEVA and its business, including factors that potentially could materially affect CEVA's financialresults, is contained in the annual and quarterly reports of CEVA Logistics AG (and its predecessor CEVA Holdings LLC),available on the Company's website, which investors are strongly encouraged to review. Should one or more of these risks oruncertainties materialise or the consequences of such a development worsen, or should underlying assumptions proveincorrect, actual outcomes may vary materially from those forecasted or expected. CEVA disclaims any intention or obligationto update publicly or revise such statements, whether as a result of new information, future events or otherwise.

This presentation includes certain non-GAAP financial information. Because not all companies calculate non-IFRS financialinformation identically (or at all), the presentations herein may not be comparable to other similarly titled measures used byother companies. Further, such non-GAAP financial information of the Company should not be considered a substitute for theinformation contained in the historical financial information of the Company, if any, prepared in accordance with IFRSincluded herein.

Safe harbor statement

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Investors:Pierre BénaichSVP Investor [email protected]+41 41 547 00 48

Media:Matthias HochuliGroup Head of Marketing and [email protected]+41 41 547 00 52

Contact

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mailto:[email protected]

mailto:[email protected]

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