Release Details
EXL Reports 2010 Fourth Quarter and Full Year Results and Provides Guidance for Calendar Year 2011
2010 Revenues of
2011 Revenue Guidance of
For 2011, we are providing revenue guidance of between
Financial Highlights — Fourth Quarter 2010 and Year Ended
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
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Revenues for the year ended
December 31, 2010 increased 32.3% to$252.8 million compared to$191.0 million in the year endedDecember 31, 2009 . Revenues for the year endedDecember 31, 2010 increased 35.9% excluding a one-time client payment of$5.1 million in the year endedDecember 31 , 2009. Revenues for the quarter endedDecember 31, 2010 were$70.0 million compared to$59.4 million in the quarter endedDecember 31, 2009 . Revenues for the quarter endedDecember 31, 2010 increased 28.8% excluding the one-time client payment of$5.1 million in the quarter endedDecember 31, 2009 .
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Gross margin for the year ended
December 31, 2010 was 40.1% compared to 41.2% for the year endedDecember 31, 2009 excluding a one-time client payment of$5.1 million in the year endedDecember 31, 2009 . Outsourcing gross margin for the year endedDecember 31, 2010 was 40.9% compared to 43.7% for the year endedDecember 31, 2009 excluding a one-time client payment of$5.1 million in the year endedDecember 31, 2009 . Transformation gross margin for the year endedDecember 31, 2010 was 37.6% compared to 31.4% for the year endedDecember 31, 2009 . Gross margin for the quarter endedDecember 31, 2010 was 40.4% compared to 44.1% for the quarter endedDecember 31, 2009 excluding a one-time client payment of$5.1 million in the quarter endedDecember 31, 2009 .
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Operating margin for the year ended
December 31, 2010 was 10.5% compared to 12.8% for the year endedDecember 31, 2009 . Operating margin for the quarter endedDecember 31, 2010 was 11.1% compared to 20.4% for the quarter endedDecember 31 , 2009. Adjusted operating margin for the year endedDecember 31, 2010 was 14.7% compared to 14.3% for the year endedDecember 31 , 2009. Adjusted operating margin for the quarter endedDecember 31, 2010 was 15.1% compared to 16.3% for the quarter endedDecember 31, 2009 .
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Net income for the year ended
December 31, 2010 was$26.6 million compared to$15.7 million for the year endedDecember 31, 2009 . Net income for the quarter endedDecember 31, 2010 was$8.3 million compared to$7.5 million for the quarter endedDecember 31 , 2009. Adjusted EBITDA for the year endedDecember 31, 2010 was$50.8 million compared to$37.8 million for the year endedDecember 31 , 2009. Adjusted EBITDA for the quarter endedDecember 31, 2010 was$14.6 million compared to$12.0 million for the quarter endedDecember 31, 2009 .
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Diluted earnings per share for the year ended
December 31, 2010 was$0.88 compared to$0.53 for the year endedDecember 31, 2009 . Diluted earnings per share for the quarter endedDecember 31, 2010 was$0.27 compared to$0.25 in the quarter endedDecember 31, 2009 . Adjusted diluted earnings per share for the year endedDecember 31, 2010 was$1.08 compared to$0.60 for the year endedDecember 31, 2009 . Adjusted diluted earnings per share for the quarter endedDecember 31, 2010 was$0.29 compared to$0.18 in the quarter endedDecember 31, 2009 .
Business Announcements
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Won 26 new clients across outsourcing and transformation services in 2010, including 6 clients in the fourth quarter of 2010. We now have approximately 120 clients including over 60 insurance companies.
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Expanded multiple strategic outsourcing relationships with the migration of over 110 outsourcing processes in 2010. Migrations for our two recently acquired strategic clients are currently underway.
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Expanded our global delivery capacity by over 800 seats spread over 100,000 square feet in a tax-advantaged special economic zone located in Noida, India. The planned second phase entails setting up of an additional 1,400 seats. The total expansion represents a 21% increase in our delivery capacity as compared to the total number of workstations at the end of 2010.
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Strengthened our global client services and business development teams by hiring four additional Vice Presidents since the beginning of the fourth quarter.
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Increased our headcount as of
December 31, 2010 to approximately 12,700 compared to approximately 10,700 as ofDecember 31, 2009 .
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Experienced attrition for billable employees for the year ended
December 31, 2010 of 34.4% compared to 22.6% in the year endedDecember 31 , 2009. Attrition for the quarter endedDecember 31, 2010 was 35.5% compared to 27.3% for the quarter endedDecember 31, 2009 , and 32.8% for the quarter endedSeptember 30, 2010 . The increase in attrition is a result of the heightened demand environment for professional resources due to ongoing economic expansion in the geographies in which our global delivery facilities are located.
2011 Outlook
The Company is providing the following guidance for calendar year 2011 based on current exchange rates:
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Revenues of between
$295.0 million to $305.0 million
- Adjusted operating margin, excluding the impact of stock-based compensation expense and amortization of intangibles, of between 13.0% to 14.0%
Conference Call
EXL will host a conference call on
To listen to the conference call via phone, please dial 1-877-303-6384 or 1-224-357-2191 and enter "43255313". For those who cannot access the live broadcast, a replay will be available by dialing 1-800-642-1687 or 1-706-645-9291 and entering "43255313" from two hours after the end of the call until
About
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
| EXLSERVICE HOLDINGS, INC. | ||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||
| (In thousands, except share and per share amounts) | ||||
|
(Audited) Year ended December 31, |
(Unaudited) Three Months ended December 31, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| Revenues | $ 252,753 | $ 190,995 | $ 70,040 | $ 59,438 |
| Cost of revenues (exclusive of depreciation and amortization) | 151,285 | 109,389 | 41,769 | 30,403 |
| Gross profit | 101,468 | 81,606 | 28,271 | 29,035 |
| Operating expenses: | ||||
| General and administrative expenses | 40,278 | 31,850 | 11,040 | 9,713 |
| Selling and marketing expenses | 18,832 | 13,950 | 4,752 | 3,910 |
| Depreciation and amortization | 15,835 | 11,405 | 4,687 | 3,268 |
| Total operating expenses | 74,945 | 57,205 | 20,479 | 16,891 |
| Income from continuing operations | 26,523 | 24,401 | 7,792 | 12,144 |
| Other income/(expense): | ||||
| Foreign exchange gain/(loss) | 4,199 | (5,929) | 1,747 | (915) |
| Interest and other income, net | 1,367 | 1,023 | 373 | 167 |
| Income from continuing operations before income taxes | 32,089 | 19,495 | 9,912 | 11,396 |
| Income tax provision | 5,497 | 3,703 | 1,616 | 3,872 |
| Income from continuing operations | 26,592 | 15,792 | 8,296 | 7,524 |
| Loss from discontinued operations, net of taxes | -- | (139) | -- | -- |
| Net income | $ 26,592 | $ 15,653 | $ 8,296 | $ 7,524 |
| Earnings per share (a): | ||||
| Basic : | ||||
| Continuing operations | $ 0.91 | $ 0.55 | $ 0.28 | $ 0.26 |
| Discontinued operations | -- | -- | -- | -- |
| $ 0.91 | $ 0.54 | $ 0.28 | $ 0.26 | |
| Diluted : | ||||
| Continuing operations | $ 0.88 | $ 0.54 | $ 0.27 | $ 0.25 |
| Discontinued operations | -- | -- | -- | -- |
| $ 0.88 | $ 0.53 | $ 0.27 | $ 0.25 | |
| Weighted-average number of shares used in computing earnings per share: | ||||
| Basic | 29,281,364 | 28,963,770 | 29,458,508 | 29,044,346 |
| Diluted | 30,388,520 | 29,417,910 | 30,806,190 | 29,932,880 |
| (a) Per share amounts may not foot due to rounding. | ||||
| EXLSERVICE HOLDINGS, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (Audited) | ||
| (In thousands, except share and per share amounts) | ||
| December 31, | December 31, | |
| 2010 | 2009 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 111,182 | $ 132,215 |
| Short-term investments | 3,084 | 4,009 |
| Restricted cash | 231 | 65 |
| Accounts receivable, net of allowance for doubtful accounts of $246 at December 31, 2010 and $262 at December 31, 2009 | 44,186 | 34,856 |
| Prepaid expenses | 3,317 | 2,484 |
| Deferred tax assets, net | 1,721 | 1,125 |
| Advance income-tax, net | 5,364 | -- |
| Other current assets | 5,244 | 3,045 |
| Total current assets | 174,329 | 177,799 |
| Fixed assets, net | 34,733 | 23,964 |
| Restricted cash | 3,432 | 3,895 |
| Deferred tax assets, net | 14,333 | 12,229 |
| Intangible assets, net | 18,591 | 627 |
| Goodwill | 43,370 | 19,619 |
| Other assets | 16,895 | 11,487 |
| Total assets | $ 305,683 | $ 249,620 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 4,860 | $ 5,345 |
| Deferred revenue | 5,108 | 4,745 |
| Accrued employee cost | 23,947 | 16,020 |
| Accrued expenses and other current liabilities | 16,560 | 11,530 |
| Income taxes payable | -- | 543 |
| Current portion of capital lease obligations | 231 | 144 |
| Total current liabilities | 50,706 | 38,327 |
| Capital lease obligations, less current portion | 389 | 137 |
| Non-current liabilities | 6,042 | 5,438 |
| Total liabilities | 57,137 | 43,902 |
| Commitments and contingencies | ||
| Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued | -- | -- |
| Stockholders' equity: | ||
|
Common stock, $0.001 par value; 100,000,000 shares authorized, 29,690,463 shares issued and 29,437,961 shares outstanding as of December 31, 2010 and 29,278,10 shares issued and 29,031,073 shares outstanding as of December 31, 2009 |
30 | 29 |
| Additional paid-in capital | 136,173 | 124,493 |
| Retained earnings | 112,266 | 85,674 |
| Accumulated other comprehensive income/(loss) | 1,126 | (3,515) |
| 249,595 | 206,681 | |
| Less: 252,502 shares as of December 31, 2010 and 247,030 shares as of December 31, 2009, held in treasury, at cost | (1,069) | (976) |
| ExlService Holdings, Inc. stockholders' equity | 248,526 | 205,705 |
| Non-controlling interest | 20 | 13 |
| Total stockholders' equity | 248,546 | 205,718 |
| Total liabilities and stockholders' equity | $ 305,683 | $ 249,620 |
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 year ended
| Reconciliation of Adjusted Operating Income and Adjusted EBITDA | ||||||||||
| (Amounts in thousands) | ||||||||||
|
Year Ended December 31, |
Three Months Ended December 31, |
Three Months Ended September 30, |
||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | ||||||
| Net income (GAAP) | $ 26,592 | $ 15,653 | $ 8,296 | $ 7,524 | $ 7,804 | |||||
|
add: Income tax provision, Other income/(expense), Income/(loss) from discontinued operations, net of taxes |
(69) | 8,748 | (504) | 4,620 | (821) | |||||
| Income from continuing operations (GAAP) | $ 26,523 | $ 24,401 | $ 7,792 | $ 12,144 | $ 6,983 | |||||
| add: Stock-based compensation expense (a) | 8,491 | 7,093 | 2,138 | 1,704 | 2,121 | |||||
| add: Amortization of acquisition-related intangibles (b) | 2,024 | 167 | 635 | 83 | 688 | |||||
| subtract: One-time client payment (c) | -- | (5,075) | -- | (5,075) | -- | |||||
| Adjusted operating income (Non-GAAP) | $ 37,038 | $ 26,586 | $ 10,565 | $ 8,856 | $ 9,792 | |||||
| Adjusted operating income margin % | 14.7% | 14.3% | 15.1% | 16.3% | 14.5% | |||||
| add: Depreciation | 13,811 | 11,238 | 4,051 | 3,185 | 3,530 | |||||
| Adjusted EBITDA (Non-GAAP) | $ 50,849 | $ 37,824 | $ 14,616 | $ 12,041 | $ 13,322 | |||||
| Adjusted EBITDA margin % | 20.1% | 20.3% | 20.9% | 22.1% | 19.7% | |||||
| (a) To exclude stock-based compensation expense under ASC Topic 718. | ||||||||||
| (b) To exclude amortization of acquisition-related intangibles. | ||||||||||
| (c) To exclude a one-time payment from a client in 2009. | ||||||||||
| Note: Adjusted operating income margin % and Adjusted EBITDA margin % calculated for three months ended December 31, 2009 and year ended December 31, 2009 excludes a one-time client payment of $5.1 million. | ||||||||||
| Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share | ||||||||||
| (Amounts in thousands, except per share data) | ||||||||||
|
Year Ended December 31, |
Three Months Ended December 31, |
Three Months Ended September 30, |
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| 2010 | 2009 | 2010 | 2009 | 2010 | ||||||
| Net income (GAAP) | $ 26,592 | $ 15,653 | $ 8,296 | $ 7,524 | $ 7,804 | |||||
| add: Stock-based compensation expense (a) | 8,491 | 7,093 | 2,138 | 1,704 | 2,121 | |||||
| add: Amortization of acquisition-related intangibles (b) | 2,024 | 167 | 635 | 83 | 688 | |||||
| subtract: Tax impact on stock-based compensation expense | (3,580) | (2,025) | (1,785) | (487) | (639) | |||||
| subtract: Tax impact on amortization of acquisition-related intangibles | (625) | -- | (206) | -- | (364) | |||||
| subtract: One-time client payment (c) | -- | (5,075) | -- | (5,075) | -- | |||||
| add: Tax impact of one-time client payment | -- | 1,776 | -- | 1,776 | -- | |||||
| Adjusted net income | $ 32,902 | $ 17,589 | $ 9,078 | $ 5,525 | $ 9,610 | |||||
| Adjusted diluted earnings per share | $ 1.08 | $ 0.60 | $ 0.29 | $ 0.18 | $ 0.32 | |||||
| (a) To exclude stock-based compensation expense under ASC Topic 718. | ||||||||||
| (b) To exclude amortization of acquisition-related intangibles. | ||||||||||
| (c) To exclude a one-time payment from a client in 2009. | ||||||||||
CONTACT:Source:Jarrod Yahes TreasurerExlService Holdings, Inc. 280 Park Avenue New York, NY 10017 (212) 277-7109 ir@exlservice.com
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