EXL Reports 2014 First Quarter Results
"In EXL's targeted industry verticals, clients are actively looking for innovative solution ideas that integrate decision analytics and operations management in long-term annuity arrangements. We are making strong progress in strengthening our Business EXLerator Framework across operations management engagements to infuse business process automation, analytics, and benchmarking in a manner that generates differentiated value for EXL's clients."
"For 2014, we are reiterating our revenue guidance of
Financial Highlights - First Quarter 2014
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
Revenues for the quarter ended
March 31, 2014were $121.8 millioncompared to $116.0 millionfor the quarter ended March 31, 2013and $124.1 millionfor the quarter ended December 31, 2013. Revenues for the quarter ended March 31, 2014were reduced by approximately $2.5 milliondue to the reimbursement of transition and disentanglement costs tied to a previously disclosed client issue. Outsourcing services revenues for the quarter ended March 31, 2014were $100.1 millioncompared to $97.6 millionfor the quarter ended March 31, 2013and $100.4 millionfor the quarter ended December 31, 2013. Transformation services revenues for the quarter ended March 31, 2014were $21.7 millioncompared to $18.4 millionfor the quarter ended March 31, 2013and $23.7 millionfor the quarter ended December 31, 2013.
Gross margin for the quarter ended
March 31, 2014was 38.5% compared to 37.1% for the quarter ended March 31, 2013and 42.0% for the quarter ended December 31, 2013. Outsourcing services gross margin for the quarter ended March 31, 2014was 41.2% compared to 39.0% for the quarter ended March 31, 2013and 43.4% for the quarter ended December 31, 2013. Transformation services gross margin for the quarter ended March 31, 2014was 26.2% compared to 27.1% for the quarter ended March 31, 2013and 35.7% for the quarter ended December 31, 2013.
Operating margin for the quarter ended
March 31, 2014was 12.7% compared to 10.4% for the quarter ended March 31, 2013and 18.5% for the quarter ended December 31, 2013. Adjusted operating margin for the quarter ended March 31, 2014was 19.0% compared to 15.0% for the quarter ended March 31, 2013and 21.9% for the quarter ended December 31, 2013.
Net income for the quarter ended
March 31, 2014was $11.1 millioncompared to $9.8 millionfor the quarter ended March 31, 2013and $15.9 millionfor the quarter ended December 31, 2013. Adjusted EBITDA for the quarter ended March 31, 2014was $28.5 millioncompared to $22.3 millionfor the quarter ended March 31, 2013and $31.8 millionfor the quarter ended December 31, 2013.
Diluted earnings per share for the quarter ended
March 31, 2014were $0.33compared to $0.29for the quarter ended March 31, 2013and $0.47for the quarter ended December 31, 2013. Adjusted diluted earnings per share for the quarter ended March 31, 2014were $0.50compared to $0.40for the quarter ended March 31, 2013and $0.56for the quarter ended December 31, 2013.
- Successfully implemented EXL Landa's CareRadius medical management suite with two leading BlueCross BlueShield health plans who together serve more than 7.2 million customers.
- Selected by Oxford Life family of companies for consolidation and end-to-end processing of life, annuity & Medicare Supplement products on EXL LifePRO®.
Announced the appointment of
Nancy Saltzmanin the role of EVP, General Counsel & CompanySecretary.
- Hired a Chief Actuarial Officer to focus on clinical analytics capability development within the healthcare vertical.
Positioned in the "
Winner's Circle" in HfS Research'sBlueprint Report for Insurance BPO.
Expanded our delivery footprint with the establishment of a new
Analytics Center of Excellencein Mumbai, Indiafocused on providing decision analytics services to the banking and financial services vertical.
- Won five new clients during the first quarter, including three transformation clients.
- Expanded multiple outsourcing services relationships, including migrating 25 new processes in the first quarter of 2014.
Recorded headcount as of
March 31, 2014of 22,800 (including employees under managed services), compared to 21,350 as of March 31, 2013and 22,200 as of December 31, 2013.
Reported employee attrition for the quarter ended
March 31, 2014of 28.8%, compared with 23.6% for the quarter ended March 31, 2013and 25.0% for the quarter ended December 31, 2013.
Based on current visibility and an Indian rupee to U.S. dollar exchange rate of 61, the Company is reiterating its guidance for calendar year 2014. Guidance excludes the impact of the reimbursement of transition and disentanglement costs for a disclosed client issue:
$480 millionto $500 million.
Adjusted diluted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, of
To listen to the conference call via phone, please dial 1-877-303-6384 or 1-224-357-2191 and an operator will assist you. For those who cannot access the live broadcast, a replay will be available on the EXL website (ir.exlservice.com).
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 detail in the Company's filings with the
|CONSOLIDATED STATEMENTS OF INCOME|
|(In thousands, except share and per share amounts)|
Three months ended
|Cost of revenues (exclusive of depreciation and amortization)||74,922||72,913|
|General and administrative expenses||14,800||14,721|
|Selling and marketing expenses||10,232||9,755|
|Depreciation and amortization||6,356||6,512|
|Total operating expenses||31,388||30,988|
|Income from operations||15,487||12,105|
|Other income/(expense) :|
|Foreign exchange loss||(833)||(49)|
|Interest and other income, net||958||703|
|Income before income taxes||15,612||12,759|
|Income tax provision||4,465||2,997|
|Earnings per share:|
|Weighted-average number of shares used in computing earnings per share:|
|CONSOLIDATED BALANCE SHEETS|
|(In thousands, except share and per share amounts)|
|Cash and cash equivalents||
|Accounts receivable, net||77,737||76,121|
|Deferred tax assets, net||5,455||6,958|
|Advance income tax, net||3,978||2,024|
|Other current assets||12,955||7,881|
|Total current assets||257,947||252,627|
|Fixed assets, net||44,031||34,564|
|Deferred tax assets, net||9,905||12,254|
|Intangible assets, net||32,643||34,115|
|Liabilities and Stockholders' Equity|
|Accrued employee cost||18,371||29,405|
|Accrued expenses and other current liabilities||29,575||32,219|
|Current portion of capital lease obligations||1,108||1,119|
|Total current liabilities||62,994||76,075|
|Capital lease obligations, less current portion||1,222||1,371|
|Commitments and contingencies|
|Accumulated other comprehensive loss||(48,741)||(60,718)|
|Total stockholders' equity including shares held in treasury||419,789||390,816|
Less: 1,188,385 shares as of
|Total stockholders' equity||394,688||366,174|
|Total liabilities and stockholders' equity||
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 (adjusted EBITDA, adjusted net income and adjusted diluted earnings per share) that the
Additionally, the Company provides certain information on a constant currency basis, which reflects a comparison of current period results translated at the prior period currency rates. This information is provided because the Company believes that it provides useful incremental information to investors regarding the Company's operating performance.
The following table shows the reconciliation of these adjusted financial measures from GAAP measures for the quarter ended
|Reconciliation of Adjusted Operating Income and Adjusted EBITDA|
|(Amounts in thousands)|
Three Months Ended
|Revenues (GAAP)||$ 121,797||$ 116,006||$ 124,123|
|add: Reimbursement of transition and disentanglement costs (a)||2,471||--||351|
|Revenues (Non-GAAP)||$ 124,268||$ 116,006||$ 124,474|
|subtract: Cost of revenues (GAAP)||(74,922)||(72,913)||(72,050)|
|subtract: Operating expenses (GAAP)||(31,388)||(30,988)||(29,098)|
|Income from operations (Non- GAAP)||$ 17,958||$ 12,105||$ 23,326|
|add: Stock-based compensation expense (b)||4,176||3,645||2,360|
|add: Amortization of acquisition-related intangibles (c)||1,536||1,634||1,536|
|Adjusted operating income (Non-GAAP)||$ 23,670||$ 17,384||$ 27,222|
|Adjusted operating income margin as a % of Revenues (Non-GAAP)||19.0%||15.0%||21.9%|
|Adjusted EBITDA (Non-GAAP)||$ 28,490||$ 22,262||$ 31,760|
|Adjusted EBITDA margin as a % of Revenues (Non-GAAP)||22.9%||19.2%||25.5%|
|(a) To exclude reimbursement of transition and disentanglement costs for a disclosed client issue.|
|(b) To exclude stock-based compensation expense under ASC Topic 718.|
|(c) To exclude amortization of acquisition-related intangibles.|
|Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share|
|(Amounts in thousands, except per share data)|
Three Months Ended
|Net income (GAAP)||$ 11,147||$ 9,762||$ 15,859|
|add: Stock-based compensation expense (a)||4,176||3,645||2,360|
|add: Amortization of acquisition-related intangibles (b)||1,536||1,634||1,536|
|add: reimbursement of transition and disentanglement costs (c)||2,471||--||351|
|subtract: Tax impact on stock-based compensation expense||(1,596)||(1,396)||(900)|
|subtract: Tax impact on amortization of acquisition-related intangibles||(170)||(191)||(170)|
|subtract: Tax impact on reimbursement of transition and disentanglement costs||(939)||--||(133)|
|Adjusted net income (Non-GAAP)||$ 16,625||$ 13,454||$ 18,903|
|Adjusted diluted earnings per share (Non-GAAP)||$ 0.50||$ 0.40||$ 0.56|
|(a) To exclude stock-based compensation expense under ASC Topic 718.|
|(b) To exclude amortization of acquisition-related intangibles.|
|(c) To exclude reimbursement of transition and disentanglement costs for a disclosed client issue.|
ExlService Holdings, Inc. 280 Park Avenue New York, NY10017 (212) 277-7109 email@example.com
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