Comment / Analysis: CEVA a more attractive proposition after pivotal refinancing

03/05/2017

CEVA Logistics’ latest achievements must not be underestimated.

Its first-quarter (Q1) figures released today testify to a turnaround that still needs a lot of work to satisfy all stakeholders, but there are important signs on the road to recovery, now that a pivotal refinancing round has been wrapped up.

Interesting times

Peter Waller, appointed chief financial officer in October, told The Loadstar this morning that the first six months had been “interesting, [with] lots of challenges and lots of progress”.

He added: “I have ...

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Peter
May 04, 2017 at 7:25 am
CFO of the company does have to be optimistic about prospect of the company in frond of investors & public … this is given

What options did debts holders have ? They are trapped … CEVA does not have funds to pay back . FULL STOP. The only HOPE debt holders have is to spin it off to somebody else 🙁

What is so impressive about q1 performance ? Then if we call q1 as impressive then we should call last 3 years disastrous (Revenue drop, margin erased) ?

Competition ( e.g. Amazon ) is increasing .. this business model does not have future as underlining cost is too high too compete .. look at DHL they have robots in some warehouses … this is BIG investments … the funds Ceva does not have..

What is left ..spinning ? buying time till a flip ?

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- Ale Pasetti
  May 04, 2017 at 10:10 am
  Hi Peter,
  
  Who said Q1 performance was impressive?
  
  Also, I quoted a couple of investors who actively trade the debt and the feedback I received was surely positive based on a successful refinancing round that, as I said, gives CEVA time to deliver. Some key shareholders are being rewarded awesomely given the annual yield they receiver from the investment.
  
  Then, talking about whether its capital structure is properly balanced, I agree with you — there are still problems, but I think Mr Waller is well prepared to get things right.
  
  Thanks much for your comment, much appreciated.
  
  Best,
  
  Ale
  
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  - Peter
    May 08, 2017 at 1:48 am
    CFO said that he is impressed with Logistic business….
    CL business grew 1% in q1 2017 vs q1 2016 —– impressive ?
    
    Company said it is strong / robust results … well why company was silent in the last 3 years with its language re terrible performance 25 % revenue drop, margin drop, hundred of millions of debt being added in…
    
    Look at margin in q1 2017 it is still dropping vs 2016 …
    
    Debt holders are trapped , company issue has huge Risk factor … just read its risk factor page… they simply do not have $$$..
    
    what is so good about recent debt deal ? they had to pay double in interest cost vs previous one… seems to be only loan sharks now dealing with them…
    
    If I would be trade creditor / supplier – I would increase my prices to Ceva to cover risks or work on pre-payments arrangements ..
    
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    - Ale Pasetti
      May 08, 2017 at 1:52 pm
      Peter, if you read my entire coverage I think we could easily end up agreeing on many topics, and surely you raise valid points.
      
      I happy to give it the benefit of the doubt for a few quarters based on latest developments, but you are right — there’s risk embedded in this corporate story, and PE should be blamed for a deal that was not properly structured 10 years ago.
      
      Best,
      
      Ale
      
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      - Peter
        May 08, 2017 at 9:37 pm
        Al,
        PE can be blamed for poor structuring ar first.
        
        But in your coverage you remain silent or at least conrinue to give “benefit of doubt” to current exec team who was steering this CO in the last 3 yeara.
        
        Achievments?
        Revenue drop 25%
        Margins erased
        Highly experienced, passionate managers who knew on the ground operation left.
        High level , connected to inner circle sales peole took charge of the business
        Low staff morale if you talk to many privately from supervisors down..
        Hundreds of millions of debt added..
        
        So, why debtholders roll them? Because they are trapped and best they can do is to ask for higher interest..
        
        In the last 10 years of performance it is last 3 years which really “stand out”
      - Ale Pasetti
        May 09, 2017 at 10:03 am
        “But in your coverage you remain silent or at least conrinue to give “benefit of doubt” to current exec team who was steering this CO in the last 3 yeara.”
        
        Peter, that is not fair. If you read our team’s coverage since the end of 2014 (and mine, in particular), you might be able to form a more balanced view of what we had to say on CEVA, and its latest achievements.
        
        Thanks for stopping by.
Ted
May 05, 2017 at 2:16 pm
The article seems to downplay (or minimize) the staffing challenges –

“We are a people business,” Mr Waller countered, when asked if a significant reduction in headcount was possible this year…

Overall CEVA laid off (re-accomodated??) over 1,000 staff late 2016. Additionally many more of the seasoned staff in the FM and CL groups are exiting. At the ground level, where the operation meet the road, there is lack of clarity of purpose and lack of any appreciation for staff. Biggest feedback is “nobody cares and they seem to see staff as a disposable commodity”. Tenure for most of the Senior managers is less than 2 years.

Their plan is to only take on the commodity clean and tidy business. They will have a solution, and as long as that air / ocean / freight / logistics need fits into the commoditized framework, good to go.

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- Mike Hansen
  May 06, 2017 at 7:11 pm
  U are indeed a funny person. Where do u get your great info from ? Being one of the 1000 sacked ones ? Isn’t it rather a good sign that a company reduces in not needed costs in this case staff ?
  
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  - Bert
    May 15, 2017 at 5:38 am
    Mike, the logistics arena is filled with people that are in the know. In 2012 ceva tried to avoid restructuring and cut people with the results that the business collapsed. The result was a loss of 1 billion!
    The story is simple. The company is sucked dry by vampires. The debt holders have received during 10 years some 3 billion and a lot went to apollo. They bought debt at 30 cents in the dollar but kept receiving 12 percent on the face value or 40 percent on the investment. The cumulated losses are over 2 billion, equity is deeply negative and the debt continues rising. They have only one option and that is to find bigger fools.
    
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    - Ale Pasetti
      May 15, 2017 at 2:06 pm
      Surely it is a cash cow for some… thanks, Bert.
      
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Craig Stanford
May 07, 2017 at 10:57 pm
“Same Same”: If anyone took the time to read CEVA’s comments every time they refinance and every time they get a new CEO or CFO you would see that the comments are recycled and hollow. The only hope remains a trade sale.

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