EXL Reports 2009 First Quarter Results
EXL Reports 2009 First Quarter Results
First Quarter Income from Operations up 69.0% First Quarter Operating Margin of 10.4%; Adjusted Operating Margin of 14.2%
Rohit Kapoor, President and CEO, commented: "EXL continues to navigate
effectively in this difficult economic environment. This quarter, EXL renewed
and expanded two significant client contracts, each with an expected total
contract value in excess of
Financial highlights are based on continuing operations of the Company and exclude the Aviva BOT, which is treated as a discontinued operation as of the third quarter of 2008. Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
-- Revenues for the quarter ended
March 31, 2009were $41.0 millioncompared to $44.4 millionfor the quarter ended March 31, 2008and $43.7 millionfor the quarter ended December 31, 2008. Revenues attributable to outsourcing services for the quarter ended March 31, 2009were $33.4 millioncompared to $34.9 millionin the quarter ended March 31, 2008and $33.2 millionin the quarter ended December 312008. Transformation services revenues for the quarter ended March 31, 2009were $7.6 millioncompared to $9.5 millionin the quarter ended March 31, 2008and $10.5 millionin the quarter ended December 31, 2008. -- Gross margin for the quarter ended March 31, 2009was 40.6% compared to 35.6% for the quarter ended March 31, 2008and 41.6% for the quarter ended December 31, 2008. Gross margin for outsourcing services was 45.3% for the quarter ended March 31, 2009compared to 43.7% for the quarter ended December 31, 2008. Transformation services gross margin was 19.7% for the quarter ended March 31, 2009compared to 34.9% for the quarter ended December 31, 2008. -- Operating margin for the quarter ended March 31, 2009was 10.4%, compared to 5.7% for the quarter ended March 31, 2008and 12.4% for the quarter ended December 31, 2008; adjusted operating margin, excluding the impact of stock-based compensation expense and amortization of intangibles, for the quarter ended March 31, 2009was 14.2% compared to 8.4% for the quarter ended March 31, 2008and 14.4% for the quarter ended December 31, 2008. -- Diluted earnings per share to common stockholders for the quarter ended March 31, 2009was $0.10compared to $0.16for the quarter ended March 31, 2008and $0.12for the quarter ended December 31, 2008. Business Announcements -- Expanded multiple strategic outsourcing relationships with the migration of 15 new outsourcing processes during the quarter. Migrating processes for four recently acquired clients. -- Gained significant traction in expanding relationships in transformation services that are annuity in nature across clients in insurance, retail banking and credit cards. -- Reported record low quarterly attrition of 21.0% for billable employees compared to 34.3% for the first quarter of 2008 and 33.8% for the fourth quarter of 2008. -- Extended the scope of a contract with a top 10 U.S. insurance company including a contract value anticipated to exceed $100 millionover 5 years to provide insurance domain-specific processing, analytics, and finance and accounting services. -- Renewed a strategic outsourcing contract with our largest client, Centrica, PLC( British Gas), through April 2012with the option to further extend the contract for two annual periods. Other Business Announcements -- Vishal Chhibbar will join EXL as Chief Financial Officer effective June 1, 2009. Vishal joins from GE Capitalwhere he was most recently Regional Head, Group Financial Planning, Strategy and Treasury for Australiaand New Zealand. Previously, Vishal was the Chief Financial Officer for GE Capital South Korea and prior to that assignment the Chief Financial Officer for GE Capital Indonesia and Malaysia. Vishal is a Chartered Accountant and holds a Bachelor of Commerce degree from DAV College, Dehradun. 2009 Outlook The Company is maintaining its guidance for calendar year 2009: -- Revenues between $170.0 million to $175.0 million-- Adjusted operating margin, excluding the impact of stock-based compensation expense and amortization of intangibles, between 10.0% and 12.0% Conference Call
EXL will host a conference call on
To listen to the conference call via phone, please dial 1-800-706-7745 or
1-617-614-3472 and enter "49246160." For those who cannot access the live
broadcast, a replay will be available by dialing 1-888-286-8010 or
1-617-801-6888 and entering "28815805" from two hours after the end of the
This press release contains forward-looking statements. You should not
place undue reliance on those statements because they are subject to numerous
uncertainties and factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of which are
beyond the Company's control. Forward-looking statements include information
concerning the Company's possible or assumed future results of operations,
including descriptions of its business strategy. These statements may include
words such as "may," "will," "should," "believe," "expect," "anticipate,"
"intend," "plan," "estimate" or similar expressions. These statements are
based on assumptions that we have made in light of management's experience in
the industry as well as its perceptions of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate under the circumstances. You should understand that these
statements are not guarantees of performance or results. They involve known
and unknown risks, uncertainties and assumptions. Although the Company
believes that these forward-looking statements are based on reasonable
assumptions, you should be aware that many factors could affect the Company's
actual financial results or results of operations and could cause actual
results to differ materially from those in the forward-looking statements.
These factors are discussed in more details in the Company's filings with the
You should keep in mind that any forward-looking statement made herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect the Company. The Company has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.
EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except share and per share amounts) Three months ended March 31, 2009 2008 Revenues $40,986 $44,431 Cost of revenues (exclusive of depreciation and amortization) 24,356 28,634 Gross profit 16,630 15,797 Operating expenses: General and administrative expenses 6,733 8,374 Selling and marketing expenses 3,184 2,374 Depreciation and amortization 2,430 2,515 Total operating expenses 12,347 13,263 Income from operations 4,283 2,534 Other income/(expense): Foreign exchange gain/(loss) (1,309) 1,614 Interest and other income, net 311 536 Income from continuing operations before income taxes 3,285 4,684 Income tax provision/(benefit) 263 (31) Income from continuing operations 3,022 4,715 Income/(loss) from discontinued operations, net of taxes (139) 2,085 Net income to common stockholders $2,883 $6,800 Earnings per share(a): Basic: Continuing operations $0.10 $0.16 Discontinued operations - 0.07 $0.10 $0.24 Diluted: Continuing operations $0.10 $0.16 Discontinued operations - 0.07 $0.10 $0.23 Weighted-average number of shares used in computing earnings per share: Basic 28,843,190 28,757,077 Diluted 29,079,675 29,292,838 (a) Per share amounts may not foot due to rounding. EXLSERVICE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share amounts) March 31, December 31, 2009 2008 Assets Current assets: Cash and cash equivalents $106,595 $112,174 Short-term investments 153 153 Accounts receivable, net of allowance for doubtful accounts of
$125at March 31, 2009and $128at December 31, 2008 31,888 33,714 Deferred tax assets 4,084 3,401 Income tax receivable 2,170 2,033 Prepaid expenses and other current assets 3,948 6,402 Total current assets 148,838 157,877 Fixed assets, net of accumulated depreciation of $29,040at March 31, 2009 and $27,727 at December 31, 2008 24,023 24,518 Goodwill 17,557 17,557 Deferred tax assets 2,380 3,047 Other assets 9,745 8,970 Total assets $202,543 $211,969 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $1,894 $3,371 Deferred revenue 2,911 2,961 Accrued employee cost 7,383 14,725 Accrued expenses and other current liabilities 17,069 18,011 Total current liabilities 29,257 39,068 Non-current liabilities 2,109 1,569 Total liabilities 31,366 40,637 Commitments and contingencies - - Preferred stock, $0.001par value; 15,000,000 shares authorized , none issued - - Stockholders' Equity: Common stock, $0.001par value; 100,000,000 shares authorized, 29,095,045 shares issued and outstanding as of March 31, 2009and 29,054,145 shares issued and outstanding as of December 31, 2008 29 29 Additional paid-in capital 118,226 116,676 Retained earnings 72,904 70,021 Accumulated other comprehensive loss (19,034) (14,491) 172,125 172,235 Less: 244,016 shares as of March 31, 2009and 237,080 shares as of December 31, 2008, held in treasury, at cost (948) (903) Total stockholders' equity 171,177 171,332 Total liabilities and stockholders' equity $202,543 $211,969 EXLSERVICE HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Reconciliation of Adjusted Financial Measures to GAAP Measures
In addition to its reported operating results in accordance with U.S.
generally accepted accounting principles (GAAP), EXL has included in this
release adjusted financial measures that the
The following table shows the reconciliation of these adjusted financial
measures from GAAP measures for the three month periods ended
(Amounts in thousands)
ExlService Holdings, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, Three Months Ended March 31, 2009 2009 2008 2008 US GAAP Adjustments Non-GAAP US GAAP Adjustments Non-GAAP Revenues $40,986 $- $40,986 $44,431 $- $44,431 Cost of revenues (exclusive of depreciation and amortization) 24,356 (301) (a) 24,055 28,634 (133) (a) 28,501 Gross profit 16,630 301 16,931 15,797 133 15,930 Gross Margin % 40.6% 41.3% 35.6% 35.9% Selling, general and administrative expenses 9,917 (1,238) (a) 8,679 10,748 (856) (a) 9,893 Depreciation and amortization expense 2,430 - (b) 2,430 2,515 (212) (b) 2,303 Income from operations $4,283 $1,539 $5,822 $2,534 $1,200 $3,734 Income from Operations Margin % 10.4% 14.2% 5.7% 8.4% (a) To exclude stock-based compensation expense under FAS 123R. (b) To exclude amortization of acquisition-related intangibles.