EXL Reports 2014 Second Quarter Results
For 2014, we are upwardly revising our revenue guidance to
Financial Highlights - Second Quarter 2014
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
Revenues for the quarter ended
June 30, 2014were $119.7 millioncompared to $116.0 millionfor the quarter ended June 30, 2013and $121.8 millionfor the quarter ended March 31, 2014. Revenues for the quarter ended June 30, 2014were reduced by approximately $5.7 milliondue to the reimbursement of disentanglement costs. Outsourcing services revenues for the quarter ended June 30, 2014were $94.3 millioncompared to $97.3 millionfor the quarter ended June 30, 2013and $100.1 millionfor the quarter ended March 31, 2014. Transformation services revenues for the quarter ended June 30, 2014were $25.4 millioncompared to $18.7 millionfor the quarter ended June 30, 2013and $21.7 millionfor the quarter ended March 31, 2014.
Gross margin for the quarter ended
June 30, 2014was 32.1% compared to 36.3% for the quarter ended June 30, 2013and 38.5% for the quarter ended March 31, 2014. Outsourcing services gross margin for the quarter ended June 30, 2014was 33.7% compared to 38.9% for the quarter ended June 30, 2013and 41.2% for the quarter ended March 31, 2014. Transformation services gross margin for the quarter ended June 30, 2014was 26.2% compared to 22.7% for the quarter ended June 30, 2013and 26.2% for the quarter ended March 31, 2014.
Operating margin for the quarter ended
June 30, 2014was 5.1% compared to 11.1% for the quarter ended June 30, 2013and 12.7% for the quarter ended March 31, 2014. Adjusted operating margin for the quarter ended June 30, 2014was 12.2% compared to 14.9% for the quarter ended June 30, 2013and 19.0% for the quarter ended March 31, 2014.
Net income for the quarter ended
June 30, 2014was $7.8 millioncompared to $9.2 millionfor the quarter ended June 30, 2013and $11.1 millionfor the quarter ended March 31, 2014. Adjusted EBITDA for the quarter ended June 30, 2014was $20.5 millioncompared to $22.0 millionfor the quarter ended June 30, 2013and $28.5 millionfor the quarter ended March 31, 2014.
Diluted earnings per share for the quarter ended
June 30, 2014were $0.23compared to $0.27for the quarter ended June 30, 2013and $0.33for the quarter ended March 31, 2014. Adjusted diluted earnings per share for the quarter ended June 30, 2014were $0.41compared to $0.37for the quarter ended June 30, 2013and $0.50for the quarter ended March 31, 2014.
Signed a non-binding memorandum of understanding to form a joint venture with Carvajal Tecnologia y Servicios a subsidiary of
Carvajal S.A.on July 25, 2014to address the growing demand of operations management solutions provided in Spanish. The joint venture is intended to combine Carvajal's local knowledge and brand with EXL's business process expertise and global best practices to service clients from a world-class, Latin American operation.
Acquired Blue Slate Solutions LLCon July 1, 2014which specializes in transforming operations through business process optimization, data integration and analytics by leveraging innovative techniques and technologies.
- Certified in Everest's marketing framework for best practices in safeguarding sensitive and confidential client information by adopting the new BPS (Business Process Solutions) Code of Conduct.
Received an Innovation Award from international consultancy
Alsbridge, Inc., for EXL's use of analytics and automation to improve receivables management processes for a leading UKenergy supplier.
Positioned in the "Leaders" quadrant of the "Magic Quadrant for Finance and Accounting BPO," published by Gartner on
May 28, 2014.
- Won 7 new clients during the second quarter, including 4 transformation clients.
Opened a new center in
the Philippinesin Cebu, adding over 300 workstations of additional delivery capacity.
- Expanded multiple outsourcing services relationships, including migrating 49 new processes in the second quarter of 2014.
Recorded headcount as of
June 30, 2014of 23,071 (including employees under managed services), compared to 21,556 as of June 30, 2013and 22,800 as of March 31, 2014.
Reported employee attrition for the quarter ended
June 30, 2014of 34.1%, compared with 26.8% for the quarter ended June 30, 2013and 28.8% for the quarter ended March 31, 2014.
Based on current visibility and an Indian rupee to U.S. dollar exchange rate of 60, EXL is updating its guidance for calendar year 2014. Guidance excludes the impact of the reimbursement of disentanglement costs:
$490 millionto $503 million.
Adjusted diluted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, of
To listen to the conference call via phone, please dial 1-877-303-6384 or 1-224-357-2191 and an operator will assist you. For those who cannot access the live broadcast, a replay will be available on the EXL website (ir.exlservice.com).
This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to the EXL's operations and business environment, all of which are difficult to predict and many of which are beyond EXL's control. Forward-looking statements include information concerning EXL's possible or assumed future results of operations, including descriptions of its business strategy. These statements may include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based on assumptions that we have made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under
the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although EXL believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect EXL's actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors are discussed in more detail in EXL's filings with the
|CONSOLIDATED STATEMENTS OF INCOME|
|(In thousands, except share and per share amounts)|
Three months ended
Six months ended
|Revenues||$ 119,738||$ 116,008||$ 241,535||$ 232,014|
|Cost of revenues (exclusive of depreciation and amortization)||81,259||73,930||156,181||146,843|
|General and administrative expenses||16,240||13,753||31,040||28,474|
|Selling and marketing expenses||9,463||9,136||19,695||18,891|
|Depreciation and amortization||6,679||6,362||13,035||12,874|
|Total operating expenses||32,382||29,251||63,770||60,239|
|Income from operations||6,097||12,827||21,584||24,932|
|Other income/(expense) :|
|Foreign exchange loss||(137)||(569)||(970)||(618)|
|Interest and other income, net||858||593||1,817||1,296|
|Income before income taxes||6,818||12,851||22,431||25,610|
|Income tax provision / (benefit)||(944)||3,615||3,521||6,612|
|Net income||$ 7,762||$ 9,236||$ 18,910||$ 18,998|
|Earnings per share:|
|Basic||$ 0.24||$ 0.28||$ 0.58||$ 0.58|
|Diluted||$ 0.23||$ 0.27||$ 0.56||$ 0.56|
|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||$ 160,937||$ 148,065|
|Accounts receivable, net||73,721||76,121|
|Deferred tax assets, net||4,843||6,958|
|Advance income tax, net||8,447||2,024|
|Other current assets||11,223||7,881|
|Total current assets||272,862||252,627|
|Fixed assets, net||45,978||34,564|
|Deferred tax assets, net||8,544||12,254|
|Intangible assets, net||31,147||34,115|
|Total assets||$ 494,273||$ 463,432|
|Liabilities and Stockholders' Equity|
|Accounts payable||$ 4,294||$ 4,714|
|Accrued employee cost||24,886||29,405|
|Accrued expenses and other current liabilities||29,722||32,219|
|Current portion of capital lease obligations||1,058||1,119|
|Total current liabilities||69,619||76,075|
|Capital lease obligations, less current portion||977||1,371|
|Commitments and contingencies (See Note 15)|
|Accumulated other comprehensive loss||(45,007)||(60,718)|
|Total stockholders' equity including shares held in treasury||434,393||390,816|
Less: 1,188,385 shares as of
|Total stockholders' equity||409,292||366,174|
|Total liabilities and stockholders' equity||$ 494,273||$ 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 quarter ended
|Reconciliation of Adjusted Operating Income and Adjusted EBITDA|
|(Amounts in thousands)|
Three Months Ended
Three Months Ended
|Revenues (GAAP)||$ 119,738||$ 116,008||$ 121,797|
|add: Reimbursement of disentanglement costs (a)||5,718||--||2,471|
|Revenues (Non-GAAP)||$ 125,456||$ 116,008||$ 124,268|
|subtract: Cost of revenues (GAAP)||(81,259)||(73,930)||(74,922)|
|subtract: Operating expenses (GAAP)||(32,382)||(29,251)||(31,388)|
|Income from operations (Non- GAAP)||$ 11,815||$ 12,827||$ 17,958|
|add: Stock-based compensation expense (b)||1,967||2,860||4,176|
|add: Amortization of acquisition-related intangibles (c)||1,489||1,596||1,536|
|Adjusted operating income (Non-GAAP)||$ 15,271||$ 17,283||$ 23,670|
|Adjusted operating income margin as a % of Revenues (Non-GAAP)||12.2%||14.9%||19.0%|
|Adjusted EBITDA (Non-GAAP)||$ 20,461||$ 22,049||$ 28,490|
|Adjusted EBITDA margin as a % of Revenues (Non-GAAP)||16.3%||19.0%||22.9%|
|(a) To exclude reimbursement of 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
Three Months Ended
|Net income (GAAP)||$ 7,762||$ 9,236||$ 11,147|
|add: Stock-based compensation expense (a)||1,967||2,860||4,176|
|add: Amortization of acquisition-related intangibles (b)||1,489||1,596||1,536|
|add: reimbursement of disentanglement costs (c)||5,718||--||2,471|
|subtract: Tax impact on stock-based compensation expense||(751)||(1,093)||(1,596)|
|subtract: Tax impact on amortization of acquisition-related intangibles||(170)||(183)||(170)|
|subtract: Tax impact on reimbursement of disentanglement costs||(2,173)||--||(939)|
|Adjusted net income (Non-GAAP)||$ 13,842||$ 12,416||$ 16,625|
|Adjusted diluted earnings per share (Non-GAAP)||$ 0.41||$ 0.37||$ 0.50|
|(a) To exclude stock-based compensation expense under ASC Topic 718.|
|(b) To exclude amortization of acquisition-related intangibles.|
|(c) To exclude reimbursement of disentanglement costs for a disclosed client issue.|
Steven N. BarlowVice President, Investor Relations ExlService Holdings, Inc. 280 Park Avenue New York, NY10017 (212) 624-5913 email@example.com
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