Exela Technologies, Inc. Reports Preliminary Second Quarter 2023 Results
Preliminary Second Quarter Highlights
- Revenue of
$272.9 million , up 2.3% year-over-year (up 2.5% on a constant currency basis) - Net loss of
$30.9 million - Gross profit(1) of
$60.9 million , up 23.0% or$11.4 million year-over-year, with a corresponding margin of 22.3% and up 3.8% year-over-year and up 1.4% sequentially - Adjusted EBITDA of
$40.9 million , up 12.1% year-over-year, with a corresponding margin of 15.0% and up 17.8% sequentially $106.2 million in new TCV(2) wins and renewal of$32.8M TCV reflect strength of award-winning best-in-class solutions and services- Long-term Liability(3) reduced to
$792 million from$1.608 billion - Value enhancing initiatives include Completion of Debt Recapitalization and XBP Europe progress
Conference call scheduled for
“Our improving metrics in the second quarter are a result of many factors but certain ones stand above all - focus on cost management, debt reduction and the value proposition of our services and solutions enhanced by evolving AI,” said Par Chadha, Executive Chairman of
Second Quarter Highlights
- Revenue: Revenue for Q2 2023 was
$272.9 million , up 2.3% compared to$266.8 million in Q2 2022.- Revenue for the Information and Transaction Processing Solutions segment was
$185.0 million , a decrease of 2.6% year-over-year, primarily due to lower volumes, customers rebalancing portfolios and attrition. - Healthcare Solutions revenue was
$63.6 million , an increase of 12.8% year-over-year, led by higher volumes from our new and existing customers. - Legal and
Loss Prevention Services revenue was$24.3 million , an increase of 19.5% year-over-year due to higher demand for services.
- Revenue for the Information and Transaction Processing Solutions segment was
Operating income/(loss): Operating income for Q2 2023 was
- Net Loss: Net loss for Q2 2023 was
$30.9 million , compared with a net loss of$79.2 million in Q2 2022.- EBITDA(4): EBITDA for Q2 2023 was
$31.6 million compared to a loss of$17.6 million in Q2 2022. EBITDA margin for Q2 2023 was 11.6% compared to (6.6)% in Q2 2022. - Adjusted EBITDA(5): Adjusted EBITDA for Q2 2023 was
$40.9 million , an increase of 12.1% compared to$36.5 million in Q2 2022. Adjusted EBITDA margin for Q2 2023 was 15.0%, an increase of 130 basis points from 13.7% in Q2 2022.
- EBITDA(4): EBITDA for Q2 2023 was
Capital Expenditures: Capital expenditures for Q2 2023 were 1.4% of revenue compared to 2% of revenue in Q2 2022
Nasdaq Non-Compliance Notice
On
Earnings Conference Call and Audio Webcast
Shortly after the conclusion of the call, a replay will be available through
A live webcast of this conference call will be available on the “Investors” page of the Company’s website (www.exelatech.com). A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website (http://investors.exelatech.com/) and will remain available after the call.
Below are the notes referenced above:
(1) Gross Profit is defined as revenue less cost of revenue excluding depreciation and amortization
(2) TCV: Total Contract Value, the aggregate $USD value of a contract over its life
(3) Long-term liability: Includes senior secured term loan and revolving facility, senior secured 2023 notes, senior secured 2026 notes, Securitization facility and interest-bearing current liabilities calculated ending
(4) EBITDA is a non-GAAP measure. A reconciliation of EBITDA is attached to this release.
(5) Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.
About
Exela Technologies is a business process automation (BPA) leader, leveraging a global footprint and proprietary technology to provide digital transformation solutions enhancing quality, productivity, and end-user experience. With decades of experience operating mission-critical processes, Exela serves a growing roster of more than 4,000 customers throughout 50 countries, including over 60% of the Fortune® 100. Utilizing foundational technologies spanning information management, workflow automation, and integrated communications, Exela’s software and services include multi-industry, departmental solution suites addressing finance and accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and the public sector. Through cloud-enabled platforms, built on a configurable stack of automation modules, and approximately 15,500 employees operating in 21 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner.
Find out more at www.exelatech.com
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Financial Disclosure Advisory
The preliminary unaudited financial results included in this press release are based on information available as of
About Non-GAAP Financial Measures
This press release includes constant currency, EBITDA and Adjusted EBITDA, each of which is a financial measure that is not prepared in accordance with
Forward-Looking Statements
Certain statements included in this press release are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “may”, “should”, “would”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “seem”, “seek”, “continue”, “future”, “will”, “expect”, “outlook” or other similar words, phrases or expressions. These forward-looking statements include statements regarding our industry, future events, estimated or anticipated future results and benefits, future opportunities for
For more
Website: https://investors.exelatech.com/
Twitter: @ExelaTech
LinkedIn: /exela-technologies
Facebook: @exelatechnologies
Instagram: @exelatechnologies
The information posted on the Company's website and/or via its social media accounts may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website and its social media accounts in addition to the Company's press releases, SEC filings and public conference calls and webcasts.
Investor and/or Media Contacts:
E: vincent.kondaveeti@exelatech.com
E: IR@exelatech.com
Source:
Condensed Consolidated Balance Sheets As of (in thousands of |
|||||||||
2023 | 2022 | ||||||||
(Unaudited and Not Reviewed) |
(Audited) | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 10,718 | $ | 15,073 | |||||
Restricted cash | 42,792 | 29,994 | |||||||
Accounts receivable, net of allowance for credit losses of |
106,831 | 101,616 | |||||||
Related party receivables and prepaid expenses | 463 | 759 | |||||||
Inventories, net | 11,055 | 16,848 | |||||||
Prepaid expenses and other current assets | 21,463 | 26,206 | |||||||
Total current assets | 193,322 | 190,496 | |||||||
Property, plant and equipment, net of accumulated depreciation of |
62,972 | 71,694 | |||||||
Operating lease right-of-use assets, net | 37,400 | 40,734 | |||||||
170,391 | 186,802 | ||||||||
Intangible assets, net | 182,350 | 200,982 | |||||||
Deferred income tax assets | 1,584 | 1,483 | |||||||
Other noncurrent assets | 26,785 | 29,721 | |||||||
Total assets | $ | 674,804 | $ | 721,912 | |||||
Liabilities and Stockholders' Equity (Deficit) | |||||||||
Liabilities | |||||||||
Current liabilities | |||||||||
Accounts payable | $ | 64,105 | $ | 79,249 | |||||
Related party payables | 1,773 | 2,473 | |||||||
Income tax payable | (539 | ) | 2,045 | ||||||
Accrued liabilities | 69,324 | 61,340 | |||||||
Accrued compensation and benefits | 50,691 | 54,143 | |||||||
Accrued interest | 60,103 | 60,901 | |||||||
Customer deposits | 15,906 | 16,955 | |||||||
Deferred revenue | 12,039 | 16,405 | |||||||
Obligation for claim payment | 62,294 | 44,380 | |||||||
Current portion of finance lease liabilities | 5,469 | 5,485 | |||||||
Current portion of operating lease liabilities | 11,079 | 11,867 | |||||||
Current portion of long-term debts | 106,372 | 154,802 | |||||||
Total current liabilities | 458,616 | 510,045 | |||||||
Long-term debt, net of current maturities | 958,005 | 942,035 | |||||||
Finance lease liabilities, net of current portion | 7,745 | 9,448 | |||||||
Pension liabilities, net | 17,732 | 16,917 | |||||||
Deferred income tax liabilities | 11,968 | 11,180 | |||||||
Long-term income tax liabilities | 3,801 | 2,742 | |||||||
Operating lease liabilities, net of current portion | 27,991 | 31,030 | |||||||
Other long-term liabilities | 5,955 | 6,104 | |||||||
Total liabilities | 1,491,813 | 1,529,501 | |||||||
Commitments and Contingencies (Note 8) | |||||||||
Stockholders' equity (deficit) | |||||||||
Common Stock, par value of |
261 | 162 | |||||||
Preferred stock, |
|||||||||
Series A Preferred Stock, 2,778,111 shares issued and outstanding at |
1 | 1 | |||||||
Series B Preferred Stock, 3,029,900 shares issued and outstanding at |
— | — | |||||||
Additional paid in capital | 1,169,517 | 1,102,619 | |||||||
Less: Common Stock held in treasury, at cost; 612 shares at |
(10,949 | ) | (10,949 | ) | |||||
Equity-based compensation | 57,272 | 56,958 | |||||||
Accumulated deficit | (2,024,331 | ) | (1,948,009 | ) | |||||
Accumulated other comprehensive loss: | |||||||||
Foreign currency translation adjustment | (4,992 | ) | (4,788 | ) | |||||
Unrealized pension actuarial losses, net of tax | (3,788 | ) | (3,583 | ) | |||||
Total accumulated other comprehensive loss | (8,780 | ) | (8,371 | ) | |||||
Total stockholders’ deficit | (817,009 | ) | (807,589 | ) | |||||
Total liabilities and stockholders’ deficit | $ | 674,804 | $ | 721,912 |
Condensed Consolidated Statements of Operations For the three and six months ended (in thousands of (Unaudited) |
||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
2023 (Not Reviewed) | 2022 | 2023 (Not Reviewed) | 2022 | |||||||||||||
Revenue | $ | 272,938 | $ | 266,770 | $ | 546,558 | $ | 546,168 | ||||||||
Cost of revenue (exclusive of depreciation and amortization) | 212,059 | 217,277 | 428,526 | 440,781 | ||||||||||||
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 32,026 | 50,195 | 76,407 | 93,235 | ||||||||||||
Depreciation and amortization | 14,890 | 17,993 | 31,450 | 36,205 | ||||||||||||
Related party expense | 2,739 | 2,186 | 5,851 | 4,173 | ||||||||||||
Operating profit (loss) | 11,224 | (20,881 | ) | 4,324 | (28,226 | ) | ||||||||||
Other expense (income), net: | ||||||||||||||||
Interest expense, net | 45,092 | 42,271 | 89,272 | 82,031 | ||||||||||||
Debt modification and extinguishment costs (gain), net | (6,785 | ) | 8,117 | (15,558 | ) | 9,001 | ||||||||||
Sundry expense (income), net | 1,500 | (741 | ) | 2,248 | (434 | ) | ||||||||||
Other expense (income), net | (232 | ) | 7,375 | (514 | ) | 13,534 | ||||||||||
Net loss before income taxes | (28,351 | ) | (77,903 | ) | (71,124 | ) | (132,358 | ) | ||||||||
Income tax expense | (2,535 | ) | (1,296 | ) | (5,198 | ) | (3,797 | ) | ||||||||
Net loss | $ | (30,886 | ) | $ | (79,199 | ) | $ | (76,322 | ) | $ | (136,155 | ) | ||||
Cumulative dividends for Series A Preferred Stock | (967 | ) | (876 | ) | (1,921 | ) | (1,740 | ) | ||||||||
Cumulative dividends for Series B Preferred Stock | (1,171 | ) | (1,317 | ) | (2,324 | ) | (1,392 | ) | ||||||||
Net loss attributable to common stockholders | $ | (33,024 | ) | $ | (81,392 | ) | $ | (80,567 | ) | $ | (139,287 | ) | ||||
Loss per share: | ||||||||||||||||
Basic and diluted | $ | (5.19 | ) | $ | (643.71 | ) | $ | (14.40 | ) | $ | (1,310.32 | ) |
Condensed Consolidated Statements of Cash Flows For the six months ended (in thousands of (Unaudited) |
|||||||||
Six Months Ended |
|||||||||
2023 (Not Reviewed) | 2022 | ||||||||
Cash flows from operating activities | |||||||||
Net loss | $ | (76,322 | ) | $ | (136,155 | ) | |||
Adjustments to reconcile net loss | |||||||||
Depreciation and amortization | 31,450 | 36,205 | |||||||
Original issue discount and debt issuance cost amortization | 16,064 | 5,804 | |||||||
Debt modification and extinguishment costs (gain), net | (16,964 | ) | 3,533 | ||||||
Credit loss expense | 2,865 | 285 | |||||||
Deferred income tax provision | 776 | 1,383 | |||||||
Share-based compensation expense | 313 | 836 | |||||||
Unrealized foreign currency losses (gain) | 521 | (989 | ) | ||||||
Loss (Gain) on sale of assets | (5,831 | ) | 508 | ||||||
Change in operating assets and liabilities, net of effect from acquisitions | |||||||||
Accounts receivable | (7,703 | ) | 80,674 | ||||||
Prepaid expenses and other assets | 6,495 | (10,870 | ) | ||||||
Accounts payable and accrued liabilities | (639 | ) | 45,148 | ||||||
Related party payables | (403 | ) | (23 | ) | |||||
Additions to outsource contract costs | (298 | ) | (199 | ) | |||||
Net cash provided by (used in) operating activities | (49,676 | ) | 26,140 | ||||||
Cash flows from investing activities | |||||||||
Purchase of property, plant and equipment | (3,357 | ) | (10,689 | ) | |||||
Additions to patents | — | (15 | ) | ||||||
Additions to internally developed software | (1,976 | ) | (1,736 | ) | |||||
Proceeds from sale of assets | 29,811 | 194 | |||||||
Net cash provided by (used in) investing activities | 24,478 | (12,246 | ) | ||||||
Cash flows from financing activities | |||||||||
Proceeds from issuance of Common Stock from at the market offerings | 69,260 | 177,388 | |||||||
Dividend paid on Series B Preferred Stock | — | (1,396 | ) | ||||||
Payment for fractional shares on reverse stock split | (28 | ) | — | ||||||
Cash paid for equity issuance costs from at the market offerings | (2,232 | ) | (6,493 | ) | |||||
Borrowings under factoring arrangement and Securitization Facility | 62,858 | 69,143 | |||||||
Principal repayment on borrowings under factoring arrangement and Securitization Facility | (63,577 | ) | (160,684 | ) | |||||
Cash paid for withholding taxes on vested RSUs | — | (195 | ) | ||||||
Lease terminations | — | (15 | ) | ||||||
Cash paid for debt issuance costs | (6,398 | ) | (7,125 | ) | |||||
Principal payments on finance lease obligations | (2,150 | ) | (2,884 | ) | |||||
Borrowings from senior secured revolving facility and BRCC revolver | 9,600 | 12,500 | |||||||
Repayments on senior secured revolving facility | — | (49,477 | ) | ||||||
Proceeds from issuance of 2026 Notes | — | 56,583 | |||||||
Borrowings from other loans | 24,289 | 5,491 | |||||||
Cash paid for debt repurchases | (11,858 | ) | — | ||||||
Proceeds from Second |
31,500 | — | |||||||
Repayment of BRCC term loan | (44,775 | ) | (46,202 | ) | |||||
Principal repayments on senior secured term loans and other loans | (32,991 | ) | (15,007 | ) | |||||
Net cash provided by financing activities | 33,498 | 31,627 | |||||||
Effect of exchange rates on cash | 143 | (404 | ) | ||||||
Net increase in cash and cash equivalents | 8,443 | 45,117 | |||||||
Cash, restricted cash, and cash equivalents | |||||||||
Beginning of period | 45,067 | 48,060 | |||||||
End of period | $ | 53,510 | $ | 93,177 | |||||
Supplemental cash flow data: | |||||||||
Income tax payments, net of refunds received | $ | 2,898 | $ | 4,453 | |||||
Interest paid | 72,608 | 19,103 | |||||||
Noncash investing and financing activities: | |||||||||
Assets acquired through right-of-use arrangements | 405 | 231 | |||||||
Accrued capital expenditures | 2,167 | 1,400 |
Schedule 1: Second Quarter 2023 vs. Second Quarter 2022 Financial Performance |
|||||||||||||||||||||
$ in million | Q2-2023 | Q2-2022 | Increase (Decrease) YoY ($ mn) | Increase (Decrease) YoY (%) | YTD'23 | YTD'22 | Increase (Decrease) YoY ($ mn) | Increase (Decrease) YoY (%) | |||||||||||||
Information and Transaction Processing Solutions | $ | 185.0 | $ | 190.0 | $ | (5.0 | ) | (2.6%) | 378.7 | 395.0 | (16.3 | ) | (4.1%) | ||||||||
Healthcare Solutions | 63.6 | 56.4 | 7.2 | 12.8% | 126.6 | 113.0 | 13.6 | 12.0% | |||||||||||||
Legal and |
24.3 | 20.4 | 3.9 | 19.5% | 41.2 | 38.2 | 3.0 | 7.9% | |||||||||||||
Total Revenue | $ | 272.9 | $ | 266.8 | $ | 6.2 | 2.3% | 546.6 | 546.2 | 0.4 | 0.1% | ||||||||||
Gross profit | 60.9 | 49.5 | 11.4 | 23.0% | 118.0 | 105.4 | 12.6 | 12.0% | |||||||||||||
Gross profit margin | 22.3 | % | 18.6 | % | 3.8 | % | 380 bps | 21.6 | % | 19.3 | % | 2.3 | % | 230 bps | |||||||
SG&A | 32.0 | 50.2 | (18.2 | ) | (36.2%) | 76.4 | 93.2 | (16.8 | ) | (18.0%) | |||||||||||
Operating (loss) income | 11.2 | (20.9 | ) | 32.1 | (153.8%) | 4.3 | (28.2 | ) | 32.6 | (115.3%) | |||||||||||
Operating margin | 4.1 | % | (7.8 | %) | 11.9 | % | 1190 bps | 0.8 | % | (5.2 | %) | 6.0 | % | 600 bps | |||||||
Net income (loss) | (30.9 | ) | (79.2 | ) | 48.3 | (61.0%) | (76.3 | ) | (136.2 | ) | 59.8 | (43.9%) | |||||||||
Net income margin | (11.3 | %) | (29.7 | %) | 18.4 | % | 1840 bps | (14.0 | %) | (24.9 | %) | 11.0 | % | 1100 bps | |||||||
EBITDA | 31.6 | (17.6 | ) | 49.3 | (279.3%) | 49.6 | (14.1 | ) | 63.7 | (451.2%) | |||||||||||
EBITDA Margin | 11.6 | % | (6.6 | %) | 18.2 | % | 1820 bps | 9.1 | % | (2.6 | %) | 11.7 | % | 1170 bps | |||||||
Adjusted EBITDA | $ | 40.9 | $ | 36.5 | $ | 4.4 | 12.1% | 75.6 | 72.6 | 3.0 | 4.1% | ||||||||||
Adjusted EBITDA margin | 15.0 | % | 13.7 | % | 1.3 | % | 130 bps | 13.8 | % | 13.3 | % | 0.5 | % | 50 bps | |||||||
Schedule 2: Reconciliation of Adjusted EBITDA and constant currency revenues |
|||||||||||||||||||||||
Non-GAAP constant currency revenue reconciliation | |||||||||||||||||||||||
($ in millions) | Three months ended | Six months ended | |||||||||||||||||||||
Revenues, as reported (GAAP) | $ | 272.9 | $ | 266.8 | $ | 273.6 | $ | 546.6 | $ | 546.2 | |||||||||||||
Foreign currency exchange impact (1) | 0.4 | 3.2 | 0.4 | ||||||||||||||||||||
Revenues, at constant currency (Non-GAAP) | $ | 273.3 | $ | 266.8 | $ | 276.8 | $ | 547.0 | $ | 546.2 | |||||||||||||
(1) Constant currency excludes the impact of foreign currency fluctuations and is computed by applying the average exchange rates for the three months and six months ended |
|||||||||||||||||||||||
Reconciliation of Adjusted EBITDA | |||||||||||||||||||||||
($ in millions) | Three months ended | Six months ended | |||||||||||||||||||||
Net loss (GAAP) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||
Interest expense | 45.1 | 42.3 | 44.2 | 89.3 | 82.0 | ||||||||||||||||||
Taxes | 2.5 | 1.3 | 2.7 | 5.2 | 3.8 | ||||||||||||||||||
Depreciation and amortization | 14.9 | 18.0 | 16.6 | 31.4 | 36.2 | ||||||||||||||||||
EBITDA (Non-GAAP) | ( |
) | ( |
) | |||||||||||||||||||
Transaction and integration costs | 2.9 | 8.6 | 5.2 | 8.1 | 12.3 | ||||||||||||||||||
Gain / loss on derivative instruments | (0.0 | ) | - | (0.1 | ) | (0.1 | ) | (0.0 | ) | ||||||||||||||
Other Charges / (gains) | 0.3 | 38.9 | 5.5 | 5.7 | 61.0 | ||||||||||||||||||
Sub-Total (Adj. EBITDA before O&R) | |||||||||||||||||||||||
Optimization and restructuring expenses | 6.1 | 6.6 | 6.2 | 12.3 | 13.4 | ||||||||||||||||||
Adjusted EBITDA (Non-GAAP) | |||||||||||||||||||||||
![](https://ml.globenewswire.com/media/MzUwODI3ZTctODhmMC00ZjA3LWI4M2MtYzlhNGY2YWIwZTcxLTEwOTc3Mjc=/tiny/Exela-Technologies-Inc-.png)
Source: Exela Technologies, Inc.