UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02 Results of Operations and Financial Condition.
Attached hereto as Exhibit 99.1 is a copy of a press release of Exela Technologies, Inc., dated April 4, 2024, announcing certain operating results for the fiscal quarter and year ended December 31, 2023. The information in the press release is incorporated by reference into this Item 2.02 of this Current Report on Form 8-K.
In accordance with General Instruction B.2 on Form 8-K, the information set forth under this Item 2.02 of this Current Report on Form 8-K, including the press release attached as an exhibit hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release, dated April 4, 2024 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 4, 2024
| EXELA TECHNOLOGIES, INC. | ||
| By: | /s/ Zach Maul | |
| Name: Zach Maul | ||
| Title: Secretary | ||
Exhibit 99.1
Exela Technologies Holdings, Inc. Reports Full Year 2023 Results
Full Year Highlights
| · | 2023 revenue of $1,064.1 million, down 1.2% year-over-year |
| · | Gross margin of 21.7% in 2023 vs 18.5% in 2022 |
| · | Operating profit of $8.1 million, up $236.8 million due to increased gross margin, lower SG&A and no impairments in 2023 versus 2022 |
| · | Net loss of $124.4 million ($125.1 attributable to Exela Technologies Inc), an improvement of $291.4 million year-over-year |
| · | Certain of the Company’s subsidiaries issued approximately $764.8 million of aggregate principal amount of new notes in exchange for $956.0 million of aggregate principal amount of existing 2026 notes in 2023 |
IRVING, TX April 4, 2024 (GLOBE NEWSWIRE) – Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA, XELAP), a global business process automation (“BPA”) leader, announced today its financial results for the full year ended December 31, 2023.
“2023 was a challenging year with focus on stabilizing revenues and recovering from the effects of our network outage in 2022. We made significant improvement to our balance sheet, eliminating current liabilities, and reducing our overall debt and interest expense under a difficult macro environment and uncertain outlook. We maintained our focus on cost management and leveraging automationand have 2023 initiatives in process continuing into 2024 to achieve our margin improvement goals.
Late in the year, we made investments to position the Company for future growth by entering into cyber security, data modernization, cloud and Infrastructure-as-a-Service, in addition to previously announced investments in FAO and data science. We completed the public listing on Nasdaq of XBP Europe, our European business. We also made significant investments in people. We improved gross margins and operating income, however we did not accomplish all of our goals in 2023 and have room to grow,” said Par Chadha, Executive Chairman of Exela Technologies.
Full Year Highlights
| · | Revenue: Revenue for 2023 was $1,064.1 million, a decline of 1.2% compared to $1,077.2 million in 2022 |
| · | Revenue for the Information and Transaction Processing Solutions segment was $732.3 million, a decline of 4.3% year-over-year |
| · | Healthcare Solutions generated $251.4 million, a 5.0% increase year-over-year |
| · | Legal and Loss Prevention Services generated $80.4 million in revenue, a 10.6% increase year-over-year |
| · | Operating profit: Operating profit in 2023 was $8.0 million, up $236.8 million compared with an operating loss of $228.8 million in 2022. Higher gross margin from technology advancements, lower SG&A with reductions in professional services and facility expenses, and a lack of goodwill impairment contributed to the profit improvement on a year-over-year basis. |
| · | Net Loss: Net loss for 2023 was $124.4 million ($125.1 attributable to Exela Technologies Inc), an improvement of $291.4 million compared with a net loss of $415.6 million in 2022. The year over year decrease was materially driven by improvements in operating profit, lower interest expense and a gain on debt modification and extinguishment costs relative 2022. |
| · | Adjusted EBITDA(1): Adjusted EBITDA for 2023 was $60.0 million compared to $56.8 million in 2022. Adjusted EBITDA margin for 2023 was 5.6%, an increase of 30 basis points from 2022. |
| · | Capital Expenditures: Capital expenditures for 2023 were 1.1% of revenue compared to 2% of revenue in 2022 as we continue to migrate from capital intensive infrastructure to cloud computing, by making investments in our platforms and operations. |
Below is the note referenced above:
| (1) | Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release. |
About Exela
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 14,100 employees operating in 20 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner.
To automatically receive Exela financial news by e-mail, please visit the Exela Investor Relations website, http://investors.exelatech.com/, and subscribe to E-mail Alerts.
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 Exela, and other statements that are not historical facts. These statements are based on the current expectations of Exela management and are not predictions of actual performance. These statements are subject to a number of risks and uncertainties, including without limitation the network outage described in this press release and those discussed under the heading “Risk Factors” in our Annual Report and in subsequent filings with the U.S. Securities and Exchange Commission (“SEC”). In addition, forward-looking statements provide Exela’s expectations, plans or forecasts of future events and views as of the date of this communication. Exela anticipates that subsequent events and developments will cause Exela’s assessments to change. These forward-looking statements should not be relied upon as representing Exela’s assessments as of any date subsequent to the date of this press release.
For more Exela news, commentary, and industry perspectives, visit:
Website: https://investors.exelatech.com/
X: @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:
Vincent Kondaveeti
E: vincent.kondaveeti@exelatech.com
Exela Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2023 and 2022
(in thousands of United States dollars except share and per share amounts)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 23,341 | $ | 15,073 | ||||
| Restricted cash | 43,812 | 29,994 | ||||||
| Accounts receivable, net of allowance for credit losses of $6,628 and $6,402, respectively | 76,893 | 101,616 | ||||||
| Related party receivables and prepaid expenses | 296 | 759 | ||||||
| Inventories, net | 11,502 | 16,848 | ||||||
| Prepaid expenses and other current assets | 25,364 | 26,206 | ||||||
| Total current assets | 181,208 | 190,496 | ||||||
| Property, plant and equipment, net of accumulated depreciation of $213,142 and $207,520, respectively | 58,366 | 71,694 | ||||||
| Operating lease right-of-use assets, net | 33,874 | 40,734 | ||||||
| Goodwill | 170,452 | 186,802 | ||||||
| Intangible assets, net | 164,920 | 200,982 | ||||||
| Deferred income tax assets | 3,043 | 1,483 | ||||||
| Other noncurrent assets | 24,474 | 29,721 | ||||||
| Total assets | $ | 636,337 | $ | 721,912 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Current portion of long-term debt | $ | 30,029 | $ | 154,802 | ||||
| Accounts payable | 61,109 | 79,249 | ||||||
| Related party payables | 1,938 | 2,473 | ||||||
| Income tax payable | 2,080 | 2,045 | ||||||
| Accrued liabilities | 63,699 | 61,340 | ||||||
| Accrued compensation and benefits | 65,012 | 54,143 | ||||||
| Accrued interest | 52,389 | 60,901 | ||||||
| Customer deposits | 23,838 | 16,955 | ||||||
| Deferred revenue | 12,099 | 16,405 | ||||||
| Obligation for claim payment | 66,988 | 44,380 | ||||||
| Current portion of finance lease liabilities | 4,856 | 5,485 | ||||||
| Current portion of operating lease liabilities | 10,845 | 11,867 | ||||||
| Total current liabilities | 394,882 | 510,045 | ||||||
| Long-term debt, net of current maturities | 1,030,580 | 942,035 | ||||||
| Finance lease liabilities, net of current portion | 5,953 | 9,448 | ||||||
| Pension liabilities, net | 13,192 | 16,917 | ||||||
| Deferred income tax liabilities | 11,692 | 11,180 | ||||||
| Long-term income tax liabilities | 6,359 | 2,742 | ||||||
| Operating lease liabilities, net of current portion | 26,703 | 31,030 | ||||||
| Other long-term liabilities | 5,811 | 6,104 | ||||||
| Total liabilities | 1,495,172 | 1,529,501 | ||||||
| Commitments and Contingencies (Note 14) | ||||||||
| Stockholders' deficit | ||||||||
| Common Stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 6,365,353 shares issued and outstanding at December 31, 2023 and 1,393,889 shares issued and 1,393,276 shares outstanding at December 31, 2022 | 261 | 162 | ||||||
| Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized at December 31, 2023 and December 31, 2022, respectively | ||||||||
| Series A Preferred Stock, 2,778,1 11 shares issued and outstanding at December 31, 2023 and December 31, 2022 | 1 | 1 | ||||||
| Series B Preferred Stock, 3,029,900 shares issued and outstanding at December 31, 2023 and O shares issued and outstanding at December 3 I, 2022 | ¾ | ¾ | ||||||
| Additional paid in capital | 1,179,098 | 1,102,619 | ||||||
| Less: Common Stock held in treasury, at cost; 0 shares at December 31, 2023 and 612 shares at December 31, 2022 | ¾ | (10,949 | ) | |||||
| Equity-based compensation | 57,073 | 56,958 | ||||||
| Accumulated deficit | (2,084,114 | ) | (1,948,009 | ) | ||||
| Accumulated other comprehensive loss: | ||||||||
| Foreign currency translation adjustment | (7,648 | ) | (4,788 | ) | ||||
| Unrealized pension actuarial losses, net of tax | (174 | ) | (3,583 | ) | ||||
| Total accumulated other comprehensive loss | (7,822 | ) | (8,371 | ) | ||||
| Total stockholders' deficit attributable to Exela Technologies, Inc. | (855,503 | ) | (807,589 | ) | ||||
| Noncontrolling interest in XBP Europe | (3,332 | ) | ¾ | |||||
| Total stockholders' deficit | (858,835 | ) | (807,589 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 636,337 | $ | 721,91 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
For the years ended December 31, 2023 and 2022
(in thousands of United States dollars except share and per share amounts)
| Years ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | 1,064,124 | $ | 1,077,157 | ||||
| Cost of revenue (exclusive of depreciation and amortization) | 833,422 | 877,474 | ||||||
| Selling, general and administrative expenses ( exclusive of depreciation and amortization) | 150,672 | 176,524 | ||||||
| Depreciation and amortization | 60,535 | 71,831 | ||||||
| Impairment of goodwill and other intangible assets | — | 171,182 | ||||||
| Related party expense | 11,444 | 8,923 | ||||||
| Operating profit (loss) | 8,051 | (228,777 | ) | |||||
| Other expense (income), net: | ||||||||
| Interest expense, net | 139,656 | 164,870 | ||||||
| Debt modification and extinguishment costs (gain), net | (16,129 | ) | 4,522 | |||||
| Sundry expense (income), net | 973 | (957 | ) | |||||
| Other expense (income), net | (884 | ) | 14,170 | |||||
| Loss before income taxes | (115,565 | ) | (411,382 | ) | ||||
| Income tax expense | (8,868 | ) | (4,199 | ) | ||||
| Net loss | (124,433 | ) | (415,581 | ) | ||||
| Net profit (loss) attributable to noncontrolling interest in XBP Europe, net of taxes | 723 | — | ||||||
| Net loss attributable to Exela Technologies, Inc. | $ | (125,156 | ) | $ | (415,581 | ) | ||
| Cumulative dividends for Series A Preferred Stock | (3,961 | ) | (3,588 | ) | ||||
| Cumulative dividends for Series B Preferred Stock | (4,718 | ) | (3,665 | ) | ||||
| Net loss attributable to common stockholders | $ | (133,835 | ) | $ | (422,834 | ) | ||
| Loss per share: | ||||||||
| Basic and diluted | $ | (22.37 | ) | $ | (1,372.98 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2023 and 2022
(in thousands of United States dollars unless otherwise stated)
| Years ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (124,433 | ) | $ | (415,581 | ) | ||
| Adjustments to reconcile net loss | ||||||||
| Depreciation and amortization | 60,535 | 71,831 | ||||||
| Original issue discount,. debt premium and debt issuance cost amortization | 5,411 | 15,261 | ||||||
| Interest paid on BR Exar AR Facility | (10,754 | ) | ¾ | |||||
| Debt modification and extinguishment gain, net | (17,534 | ) | (1,803 | ) | ||||
| Impairment of goodwill and other intangible assets | ¾ | 171,182 | ||||||
| Impairment of operating lease right-of-use assets | 1,942 | |||||||
| Credit loss expense | 4,486 | 1,573 | ||||||
| Deferred income tax. provision | (1,048 | ) | 147 | |||||
| Share-based compensation expense | 115 | 970 | ||||||
| Unrealized foreign currency gain | (70 | ) | (1,288 | ) | ||||
| (Gain) loss on sale of assets | (7,044 | ) | 707 | |||||
| Fair value adjustment for private warrants liability of XBP Europe | 597 | ¾ | ||||||
| Change in operating assets and liabilities | ||||||||
| Accounts receivable | 22,729 | 77,650 | ||||||
| Prepaid expenses and other current assets | 5,523 | (7,813 | ) | |||||
| Accounts payable and accrued liabilities | 63,711 | (520 | ) | |||||
| Related party payables | (71 | ) | 945 | |||||
| Additions to outsource contract costs | (539 | ) | (423 | ) | ||||
| Net cash provided by (used in) operating activities | 3,556 | (87,162 | ) | |||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant and equipment | (8,075 | ) | (18,299 | ) | ||||
| Additions to patents | ¾ | (15 | ) | |||||
| Additions to internally developed software | (3,818 | ) | (3,650 | ) | ||||
| Proceeds from sale of assets | 29,811 | 194 | ||||||
| Net cash provided by (used in) investing activities | 17,918 | (21,770 | ) | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of Common Stock from private placement | ¾ | 55 | ||||||
| Proceeds from issuance of Common Stock from at the market offerings | 69,260 | 276,337 | ||||||
| Cash received in exchange for the issuance of noncontrolling interest shares in XBP Europe | 5,205 | ¾ | ||||||
| Cash paid for equity issuance costs from at the market offerings | (2,232 | ) | (9,482 | ) | ||||
| Dividend paid on Series B Preferred Stock | ¾ | (2,532 | ) | |||||
| Payment for fractional mates on reverse stock split | (31 | ) | ¾ | |||||
| Repurchases of Common Stock for retirement | ¾ | (487 | ) | |||||
| Borrowings under factoring arrangement and Securitization Facility | 88,396 | 123,353 | ||||||
| Principal repayment on borrowings under factoring arrangement and Securitization Facility | (92,536 | ) | (216,812 | ) | ||||
| Cash paid for withholding taxes on vested RSUs | ¾ | (135 | ) | |||||
| Lease terminations | ¾ | 3 | ||||||
| Cash paid for debt issuance costs | (8,496 | ) | (7,125 | ) | ||||
| Principal payments on finance tease obligations | (4,570 | ) | (5,523 | ) | ||||
| Borrowings from senior secured revolving facility and BRCC revolver | 9,600 | 20,000 | ||||||
| Repayments on senior secured revolving facility | ¾ | (49,477 | ) | |||||
| Proceeds from issuance of July 2026 Notes | ¾ | 70,269 | ||||||
| Borrowings from other loans | 8,709 | 10,095 | ||||||
| Cash paid for debt repurchases | (11,858 | ) | (4,712 | ) | ||||
| Proceeds from Senior secured term loan | 40,000 | ¾ | ||||||
| Proceeds from Second Lien Note | 31,500 | ¾ | ||||||
| Borrowing under BR Exar AR Facility | 42,539 | ¾ | ||||||
| Repayments under BR Exar AR Facility | (42,546 | ) | ¾ | |||||
| Repayment of BRCC term loan | (48,529 | ) | (66,471 | ) | ||||
| Principal repayments on senior secured term loans and other loans | (83,787 | ) | (30,717 | ) | ||||
| Net cash provided by financing activities | 624 | 106,639 | ||||||
| Effect of exchange rates on cash, restricted cash and cash equivalents | (12 | ) | (700 | ) | ||||
| Net increase (decrease) in cash, restricted cash and cash equivalents | 21,086 | (2,993 | ) | |||||
| Cash, restricted cash, and cash equivalents | ||||||||
| Beginning of period | 45,067 | 48,060 | ||||||
| End of period | $ | 67,153 | $ | 45,067 | ||||
| Supplemental cash flow data: | ||||||||
| Income tax payments, net of refunds received | $ | 5,494 | $ | 5,790 | ||||
| Interest paid | 111,835 | 98,602 | ||||||
| Noncash investing and financing activities: | ||||||||
| Assets acquired through right-of-use arrangements | $ | 405 | $ | 4,790 | ||||
| Issuance of April 2026 Notes in exchange of July 2026 Notes | 764,800 | ¾ | ||||||
| Issuance of April 2026 Notes in exchange of 2023 term loan | 2,963 | ¾ | ||||||
| Accrued PIK interest paid through issuance of PIK Notes | 44,146 | ¾ | ||||||
| Common Stock exchanged for Series B Preferred Stock | ¾ | 6 | ||||||
| Accrued liability for true-up obligation settled through the issuance of July 2026 Notes | ¾ | 10,351 | ||||||
| Accrued capital expenditures | 2,261 | 1,851 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
Exela Technologies, Inc. and Subsidiaries
Schedule 1: Reconciliation of Adjusted EBITDA and constant currency revenues
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Loss | $ | (124,433 | ) | $ | (415,581 | ) | ||
| Taxes | 8,868 | 4,199 | ||||||
| Interest expense | 139,656 | 164,870 | ||||||
| Depreciation and amortization | 60,535 | 71,831 | ||||||
| EBITDA | 84,626 | (174,681 | ) | |||||
| Transaction and integration costs (1) | 6,172 | 18,586 | ||||||
| Non-cash equity compensation (2) | 115 | 985 | ||||||
| Other charges including non-cash (3) | (12,991 | ) | 35,932 | |||||
| Loss/(gain) on sale of assets (4) | 1,105 | 1,357 | ||||||
| Loss/(gain) on business disposals (5) | (7,223 | ) | — | |||||
| Debt modification and extinguishment costs (gain), net | (16,129 | ) | 4,522 | |||||
| Loss/(gain) on derivative instruments | — | (1,091 | ) | |||||
| Exit costs related to China operations | 1,850 | — | ||||||
| XBP Europe related de-SPAC costs | 2,478 | — | ||||||
| Impairment of goodwill, other intangible assets | — | 171,182 | ||||||
| Adjusted EBITDA | $ | 60,003 | $ | 56,792 | ||||
| (1) | Represents non-recurring legal, consulting and other fees and expenses incurred in connection with acquisitions, dispositions, debt-exchanges and other extraordinary transactions and events during the applicable period. |
| (2) | Represents the non-cash charges related to restricted stock units and options. |
| (3) | Represents fair value adjustments to our true-up guarantee obligation under the Revolver Exchange (as defined below), network outage related costs and related insurance recoveries, legal settlement costs for class action. |
| (4) | Represents a loss/(gain) recognized on the disposal of property, plant, and equipment and other assets. |
| (5) | Represents a loss/(gain) recognized on the sale of high-speed scanner business in the second quarter of 2023. |
Source: Exela Technologies, Inc.