EXL Reports 2014 Fourth Quarter and Full Year Results and Provides Guidance for Calendar Year 2015
2014 Fourth Quarter Revenues of
2014 Revenues of
2015 Revenue Guidance of
2015 Adjusted Diluted EPS Guidance of
I am pleased to announce the signing of an agreement to acquire analytics firm RPM Direct. This strategic acquisition combines EXL's large-scale analytics team with RPM's leading data-driven marketing analytics expertise and proprietary data assets focused on insurance and healthcare. RPM maintains its own database on over 250 million consumers in the U.S. in order to drive optimal data-driven decision making and predictive analytics through a flexible, on-demand service model. With the acquisition of RPM, Analytics is now expected to represent more than 20% of EXL's revenues.
Looking at the year ahead, I am optimistic about the demand environment, and see EXL extremely well positioned with a range of solutions to help our clients look deeper to find innovative solutions to their business challenges."
We announced today that our Board of Directors authorized a three-year,
For 2015, we are providing revenue guidance of
Our business is divided into two reporting segments: Operations Management (previously Outsourcing) and Analytics and Business Transformation (previously Transformation). We changed our reporting segment nomenclature for 2014 in order to better describe the nature of our engagements with our clients. The business composition of each reporting segment remains unchanged.
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
Revenues for the quarter ended
December 31, 2014were $135.3 millioncompared to $124.1 millionfor the quarter ended December 31, 2013and $122.5 millionfor the quarter ended September 30, 2014. Revenues for the quarter ended December 31, 2014were reduced by approximately $8.5 milliondue to the reimbursement of disentanglement costs. Operations Management revenues for the quarter ended December 31, 2014were $103.1 millioncompared to $100.4 millionfor the quarter ended December 31, 2013and $91.2 millionfor the quarter ended September 30, 2014. Analytics and Business Transformation revenues for the quarter ended December 31, 2014were $32.2 millioncompared to $23.7 millionfor the quarter ended December 31, 2013and $31.3 millionfor the quarter ended September 30, 2014.
Gross margin for the quarter ended
December 31, 2014was 32.5% compared to 42.0% for the quarter ended December 31, 2013and 30.6% for the quarter ended September 30, 2014. Operations Management gross margin for the quarter ended December 31, 2014was 32.8% compared to 43.4% for the quarter ended December 31, 2013and 31.0% for the quarter ended September 30, 2014. Analytics and Business Transformation gross margin for the quarter ended December 31, 2014was 31.5% compared to 35.7% for the quarter ended December 31, 2013and 29.4% for the quarter ended September 30, 2014.
Operating margin for the quarter ended
December 31, 2014was 5.2% compared to 18.5% for the quarter ended December 31, 2013and 4.4% for the quarter ended September 30, 2014. Adjusted operating margin for the quarter ended December 31, 2014was 14.1% compared to 21.9% for the quarter ended December 31, 2013and 14.3% for the quarter ended September 30, 2014. Adjusted EBITDA for the quarter ended December 31, 2014was $26.1 millioncompared to $31.8 millionfor the quarter ended December 31, 2013and $24.4 millionfor the quarter ended September 30, 2014.
Net income for the quarter ended
December 31, 2014was $7.5 millioncompared to $15.9 millionfor the quarter ended December 31, 2013and $6.1 millionfor the quarter ended September 30, 2014.
Diluted earnings per share for the quarter ended
December 31, 2014were $0.22, compared to $0.47for the quarter ended December 31, 2013and $0.18for the quarter ended September 30, 2014. Adjusted diluted earnings per share for the quarter ended December 31, 2014was $0.48compared to $0.56for the quarter ended December 31, 2013and $0.44for the quarter ended September 30, 2014.
Signed an agreement to acquire analytics firm RPM Direct. The merger consideration for RPM is
$47 millionin cash plus contingent cash consideration of up to $23 millionand approximately $4 millionof restricted stock. The acquisition is expected to close in the first quarter of 2015, subject to the fulfillment of certain closing conditions and is expected to be accretive to adjusted EPS.
Exercised our option to increase credit commitments by
$50 millionwith the same terms and conditions which were available in the credit agreement dated October 27, 2014.
Authorized a three-year,
$20 millionannual common stock repurchase program, effective immediately. Shares may be purchased through December 31, 2017by the Company on the open market and through private transactions as determined by EXL's management.
Deborah Kerrto the Board of Directors effective January 1, 2015.
Announced the appointment of
Nalin Miglaniin the role of EVP, Chief Human Resource Officer.
- Won 26 new clients for the year.
- Expanded multiple operations management relationships, including migrating 25 new processes in the fourth quarter of 2014.
- Awarded as an "Industry Leader" for security in the business process management (BPM) sector for major, industry-first initiatives in information security by NASSCOM-DSCI.
Named a leader in the transportation management segment of the 2014 "HfS Blueprint Report: Supply Chain Management BPO," published by
- Launched an integrated Accounts Receivables Management solution, which combines benchmarking and best practices with state-of-the-art technology and powerful analytics.
Recorded headcount as of
December 31, 2014of 22,800, compared to 23,050 as of September 30, 2014and 22,200 as of December 31, 2013.
Reported employee attrition for the quarter ended
December 31, 2014of 33.5%, compared with 38.0% for the quarter ended September 30, 2014and 25.0% for the quarter ended December 31, 2013.
Based on current visibility and an Indian rupee to U.S. dollar exchange rate of 62, the Company is providing the following guidance for calendar year 2015:
$570 millionto $590 million.
Adjusted diluted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, of
- Guidance excludes any contribution from the pending acquisition of RPM Direct.
To listen to the conference call via phone, please dial 1-877-303-6384 or 1-224-357-2191 and an operator will assist you. For those who cannot access the live broadcast, a replay will be available on the EXL website ir.exlservice.com).
|CONSOLIDATED STATEMENTS OF INCOME|
|(In thousands, except share and per share amounts)|
Three months ended
|Revenues, net||$ 499,278||$ 478,452||$ 135,286||$ 124,123|
|Cost of revenues (exclusive of depreciation and amortization)||332,535||290,942||91,371||72,050|
|General and administrative expenses||65,381||58,797||18,389||14,532|
|Selling and marketing expenses||39,294||36,376||10,482||8,492|
|Depreciation and amortization||28,028||24,917||7,979||6,074|
|Total operating expenses||132,703||120,090||36,850||29,098|
|Income from operations||34,040||67,420||7,065||22,975|
|Other income/(expense) :|
|Foreign exchange loss||(5)||(4,990)||323||(1,864)|
|Interest and other income, net||3,603||2,547||743||786|
|Income before income taxes||37,638||64,977||8,131||21,897|
|Income tax provision||5,193||16,880||670||6,038|
|Net income||$ 32,445||$ 48,097||$ 7,461||$ 15,859|
|Earnings per share:|
|Basic||$ 0.99||$ 1.47||$ 0.23||$ 0.48|
|Diluted||$ 0.96||$ 1.42||$ 0.22||$ 0.47|
|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||$ 176,499||$ 148,065|
|Accounts receivable, net||80,244||76,121|
|Deferred tax assets, net||4,455||6,958|
|Advance income tax, net||9,905||2,024|
|Other current assets||12,533||7,881|
|Total current assets||302,391||252,627|
|Fixed assets, net||45,369||34,564|
|Deferred tax assets, net||11,985||12,254|
|Intangible assets, net||46,979||34,115|
|Total assets||$ 573,556||$ 463,432|
|Liabilities and Stockholders' Equity|
|Accounts payable||$ 4,663||$ 4,714|
|Accrued employee cost||37,606||29,405|
|Accrued expenses and other current liabilities||40,206||32,219|
|Current portion of capital lease obligations||803||1,119|
|Total current liabilities||90,968||76,075|
|Long term borrowings||50,000||--|
|Capital lease obligations, less current portion||560||1,371|
|Commitments and contingencies|
|Accumulated other comprehensive loss||(55,509)||(60,718)|
|Total stockholders' equity including shares held in treasury||447,122||390,816|
Less: 1,297,885 shares as of
|Total stockholders' equity||419,158||366,174|
|Total liabilities and stockholders' equity||$ 573,556||$ 463,432|
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, EXL 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 EXL believes that it provides useful incremental information to investors regarding EXL's operating performance.
The following table shows the reconciliation of these adjusted financial measures from GAAP measures for the year ended
|Reconciliation of Adjusted Operating Income and Adjusted EBITDA|
|(Amounts in thousands)|
Three Months Ended
|Revenues (GAAP)||$ 499,278||$ 478,452||$ 135,286||$ 124,123||$ 122,457|
|add: Reimbursement of transition and disentanglement costs (a)||26,347||351||8,532||351||9,626|
|Revenues (Non-GAAP)||$ 525,625||$ 478,803||$ 143,818||$ 124,474||$ 132,083|
|subtract: Cost of revenues (GAAP)||(332,535)||(290,942)||(91,371)||(72,050)||(84,983)|
|subtract: Operating expenses (GAAP)||(132,703)||(120,090)||(36,850)||(29,098)||(32,083)|
|Income from operations (Non- GAAP)||$ 60,387||$ 67,771||$ 15,597||$ 23,326||$ 15,017|
|add: Stock-based compensation expense (b)||11,011||11,832||2,493||2,360||2,376|
|add: Amortization of acquisition-related intangibles (c)||6,623||6,300||2,157||1,536||1,441|
|Adjusted operating income (Non-GAAP)||$ 78,021||$ 85,903||$ 20,247||$ 27,222||$ 18,834|
|Adjusted operating income margin as a % of Revenues (Non-GAAP)||14.8%||17.9%||14.1%||21.9%||14.3%|
|Adjusted EBITDA (Non-GAAP)||$ 99,426||$ 104,520||$ 26,069||$ 31,760||$ 24,407|
|Adjusted EBITDA margin as a % of Revenues (Non-GAAP)||18.9%||21.8%||18.1%||25.5%||18.5%|
|(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)||$ 32,445||$ 48,097||$ 7,461||$ 15,859||$ 6,075|
|add: Stock-based compensation expense (a)||11,011||11,832||2,493||2,360||2,376|
|add: Amortization of acquisition-related intangibles (b)||6,623||6,300||2,157||1,536||1,441|
|add: reimbursement of transition and disentanglement costs (c)||26,347||351||8,532||351||9,626|
|subtract: Tax impact on stock-based compensation expense||(4,205)||(4,520)||(951)||(900)||(907)|
|subtract: Tax impact on amortization of acquisition-related intangibles||(879)||(714)||(348)||(170)||(191)|
|subtract: Tax impact on reimbursement of transition and disentanglement costs||(10,012)||(133)||(3,242)||(133)||(3,658)|
|Adjusted net income (Non-GAAP)||$ 61,330||$ 61,213||$ 16,102||$ 18,903||$ 14,762|
|Adjusted diluted earnings per share (Non-GAAP)||$ 1.82||$ 1.81||$ 0.48||$ 0.56||$ 0.44|
|(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.|
EXL (Nasdaq:EXLS) is a leading business process solutions company that looks deeper to drive business impact through integrated services and industry knowledge. EXL provides operations management, decision analytics and technology platforms to organizations in insurance, healthcare, banking and financial services, utilities, travel, and transportation and logistics, among others. We work as a strategic partner to help our clients streamline business operations, improve corporate finance, manage compliance, create new channels for growth and better adapt to change. Headquartered in
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 EXL's operations and business environment, all of which are difficult to predict and many of which are beyond EXL's control. Forward-looking statements include information concerning EXL'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 EXL believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect EXL'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 EXL's filings with the
Steven N. BarlowVice President, Investor Relations ExlService Holdings, Inc. 280 Park Avenue New York, NY10017 (212) 624-5913 firstname.lastname@example.org
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