Supply chain software provider Descartes announced Wednesday it reduced its workforce by 7% to about 200 people. The action is targeting “customer uncertain times” as the impact of rapid trade changes on the freight industry.
"It is a challenging and uncertain economic and trade environment for shippers, operators and logistics service providers," CEO Ed Ryan said in a press release announcing first-quarter results. "They are facing challenges in how, when or whether they respond to changes in global trade relations, tariffs, sanctions and economic forecasts."
Reducing the head count is an expansion of a quarter-old restructuring plan announced earlier, which cuts only 2% of the workforce. Recent actions and other initiatives are expected to save $15 million in cost.
Descartes (NASDAQ: DSGX) reported earnings per share for the fiscal quarter ended April 30 at 41 cents. The result is Y/y 1% higher, but the consensus estimate is 19 cents.
Merger revenue grew 12%/year to $169 million, mainly due to previous acquisitions. The company said that in light of rapid changes in the tariff environment, global trade intelligence services have “strong interest” in global trade intelligence services.
None of its customers tripped up the minimum volume commitments, which were set to 85% to 90% of the average volume.
Adjusted earnings before interest, taxes, depreciation and amortization $75 million increased by 12%, and adjusted EBITDA margin increased 20 basis points to 44.5%.
The company generated $54 million in cash flow in operations during the quarter, down 16%. It ended with $176 million in cash and an untapped line of credit of $350 million. It plans to use capital to continue to accumulate because the valuation multiple is reduced.
In the latest quarter, it acquired 3GTM, a cloud-based transportation management solution provider for $112.7 million.
Ryan said the tightening of the belt allowed the company to "live on another day to fight." He believes that if Descartes' peers are frustrated, Descartes will be in a strong position and make a acquisition.
DSGX shares fell 0.5% in after-hours trading on Wednesday.
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