Release Details
EXL Reports 2017 Second Quarter Results
2017 Second Quarter Revenues of
Q2 Diluted EPS (GAAP) of
Q2 Adjusted Diluted EPS (Non-GAAP) of
"EXL is becoming the strategic digital transformation partner of choice. Our clients use our next-generation operations management, robotics, advanced analytics and domain expertise to transform their business models. Our pipeline across our portfolio of solutions is strong as evidenced by 16 new client wins this quarter."
Financial Highlights: Second Quarter 2017
We have six reportable segments: Insurance, Healthcare, Travel, Transportation & Logistics, Finance & Accounting, All Other (Banking & Financial Services, Utilities and Consulting) and Analytics. Reconciliations of adjusted (non-GAAP) financial measures, including those reflecting constant currency, to GAAP measures are included at the end of this release.
- Revenues for the quarter ended
June 30, 2017 increased to$189.1 million compared to$170.5 million for the second quarter of 2016, an increase of 10.9% both on a reported and constant currency basis from the second quarter of 2016, and an increase of 3.3% sequentially from the quarter endedMarch 31, 2017 .
| Revenues | Gross Margin | ||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||
| Reportable Segments | 2017 | 2016 | 2017 | 2017 | 2016 | 2017 | |||||||||||||||
| (dollars in millions) | |||||||||||||||||||||
| Insurance | $ | 58.3 | $ | 50.6 | $ | 55.9 | 29.7 | % | 28.0 | % | 31.5 | % | |||||||||
| Healthcare | 18.9 | 17.4 | 18.9 | 35.3 | % | 36.9 | % | 35.6 | % | ||||||||||||
| Travel, Transportation & Logistics | 17.8 | 17.6 | 17.1 | 41.3 | % | 38.4 | % | 40.0 | % | ||||||||||||
| Finance & Accounting | 21.0 | 19.3 | 21.0 | 38.4 | % | 38.1 | % | 38.6 | % | ||||||||||||
| All Other | 21.5 | 26.0 | 21.1 | 31.5 | % | 37.3 | % | 31.6 | % | ||||||||||||
| Analytics | 51.6 | 39.6 | 49.0 | 33.9 | % | 35.5 | % | 34.6 | % | ||||||||||||
| Total revenues, net | $ | 189.1 | $ | 170.5 | $ | 183.0 | 33.6 | % | 34.3 | % | 34.4 | % | |||||||||
- Operating income margin for the quarter ended
June 30, 2017 was 8.5% compared to 9.5% in the second quarter of 2016 and 8.7% for the quarter endedMarch 31, 2017 . Adjusted operating income margin for the quarter endingJune 30, 2017 was 13.1% compared to 13.7% in the second quarter of 2016 and 13.9% for the quarter endedMarch 31, 2017 .
- Diluted earnings per share for the quarter ended
June 30, 2017 was$0.58 compared to$0.47 for the second quarter of 2016 and$0.48 for the quarter endedMarch 31, 2017 . Adjusted diluted earnings per share for the quarter endedJune 30, 2017 was$0.70 (includes one-time income tax benefit of$3.1 million or$0.09 of diluted earnings per share from conclusion of an uncertain tax position) compared to$0.55 for the second quarter of 2016 and$0.60 for the quarter endedMarch 31, 2017 .
Business Highlights: Second Quarter 2017
- Won 16 new clients, consisting of six new clients in our operations management business and 10 new clients in analytics.
- Opened our state-of-the-art Digital Experience Center in
Jersey City, New Jersey for collaboration to design and architect digital solutions that transform clients' businesses.
- Opened new delivery centers in
Chennai andHyderabad and expanded our operations centers in Kochi, Noida and Gurgaon.
- Introduced LifePRO® Version 19 with enhanced capabilities for management of complex annuities.
- Achieved Leader placement and Star Performer recognition for second straight year in the "Everest Group PEAK Matrix™ for Analytics BPS".
- Positioned as a Leader in "IDC MarketScape for Finance and Accounting BPO Services".
- Honored with 2017 LOMA Excellence in Education Awards for Insurance Training.
- Expanded multiple operations management relationships, including migrating 97 new processes.
2017 Guidance
Based on current visibility, the Company is increasing its guidance. This guidance is based on the following exchange rates for the remainder of the year:
- Revenue of
$748 million to$762 million , representing an annual revenue growth of 9% to 11% on a constant currency basis.
- Adjusted diluted earnings per share of
$2.54 to$2.64 , representing an annual increase of 9% to 13%.
Conference Call
To listen to the conference call via phone, please dial 1-877-303-6384, or if dialing internationally, 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 for a period of at least twelve months.
About
EXL (NASDAQ:EXLS) is a leading operations management and analytics company that designs and enables agile, customer-centric operating models to help clients improve their revenue growth and profitability. Our delivery model provides market-leading business outcomes using EXL's proprietary Business EXLerator Framework®, cutting-edge analytics, digital transformation and domain expertise. At EXL, we look deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. EXL serves the insurance, healthcare, banking and financial services, utilities, travel, transportation and logistics industries. Headquartered in
Continuing Statement Regarding Forward-Looking Statements 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 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) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended |
Six months ended |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues, net | $ | 189,057 | $ | 170,478 | $ | 372,090 | $ | 337,514 | ||||||||
| Cost of revenues (exclusive of depreciation and amortization) | 125,449 | 112,026 | 245,568 | 220,405 | ||||||||||||
| Gross profit | 63,608 | 58,452 | 126,522 | 117,109 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | 24,715 | 21,148 | 48,939 | 41,766 | ||||||||||||
| Selling and marketing expenses | 13,127 | 12,798 | 26,489 | 26,252 | ||||||||||||
| Depreciation and amortization | 9,637 | 8,270 | 19,063 | 16,403 | ||||||||||||
| Total operating expenses | 47,479 | 42,216 | 94,491 | 84,421 | ||||||||||||
| Income from operations | 16,129 | 16,236 | 32,031 | 32,688 | ||||||||||||
| Foreign exchange gain, net | 2,898 | 1,363 | 4,466 | 1,832 | ||||||||||||
| Interest expense | (465 | ) | (343 | ) | (897 | ) | (728 | ) | ||||||||
| Other income, net | 2,639 | 6,127 | 5,949 | 9,306 | ||||||||||||
| Income before income tax expense | 21,201 | 23,383 | 41,549 | 43,098 | ||||||||||||
| Income tax expense | 823 | 7,008 | 4,383 | 12,903 | ||||||||||||
| Net income | $ | 20,378 | $ | 16,375 | $ | 37,166 | $ | 30,195 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.60 | $ | 0.49 | $ | 1.10 | $ | 0.90 | ||||||||
| Diluted | $ | 0.58 | $ | 0.47 | $ | 1.06 | $ | 0.88 | ||||||||
| Weighted-average number of shares used in computing earnings per share: | ||||||||||||||||
| Basic | 33,819,320 | 33,621,444 | 33,833,153 | 33,500,736 | ||||||||||||
| Diluted | 34,993,226 | 34,510,400 | 35,051,767 | 34,431,028 | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share and per share amounts) | ||||||||
| As of | ||||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 89,414 | $ | 213,155 | ||||
| Short-term investments | 147,915 | 13,491 | ||||||
| Restricted cash | 1,898 | 3,846 | ||||||
| Accounts receivable, net | 123,798 | 113,067 | ||||||
| Prepaid expenses | 9,454 | 7,855 | ||||||
| Advance income tax, net | 7,337 | 6,242 | ||||||
| Other current assets | 18,784 | 21,168 | ||||||
| Total current assets | 398,600 | 378,824 | ||||||
| Property, plant and equipment, net | 63,978 | 49,029 | ||||||
| Restricted cash | 3,692 | 3,393 | ||||||
| Deferred taxes, net | 13,959 | 14,799 | ||||||
| Intangible assets, net | 46,973 | 53,770 | ||||||
| 188,154 | 186,770 | |||||||
| Other assets | 32,075 | 19,943 | ||||||
| Total assets | $ | 747,431 | $ | 706,528 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 11,661 | $ | 3,288 | ||||
| Short-term borrowings | 10,000 | 10,000 | ||||||
| Deferred revenue | 14,189 | 16,615 | ||||||
| Accrued employee cost | 39,135 | 50,832 | ||||||
| Accrued expenses and other current liabilities | 40,845 | 43,264 | ||||||
| Current portion of capital lease obligations | 203 | 232 | ||||||
| Total current liabilities | 116,033 | 124,231 | ||||||
| Long term borrowings | 35,000 | 35,000 | ||||||
| Capital lease obligations, less current portion | 310 | 300 | ||||||
| Non-current liabilities | 16,166 | 14,819 | ||||||
| Total liabilities | 167,509 | 174,350 | ||||||
| Commitments and contingencies | ||||||||
| Preferred stock, |
— | — | ||||||
| Stockholders' equity: | ||||||||
| Common stock, |
36 | 36 | ||||||
| Additional paid-in capital | 303,486 | 284,646 | ||||||
| Retained earnings | 415,342 | 382,722 | ||||||
| Accumulated other comprehensive loss | (55,451 | ) | (75,057 | ) | ||||
| Total including shares held in treasury | 663,413 | 592,347 | ||||||
| Less: 2,560,697 shares as of |
(83,694 | ) | (60,362 | ) | ||||
| Stockholders' equity | $ | 579,719 | $ | 531,985 | ||||
| Non-controlling interest | 203 | 193 | ||||||
| Total equity | $ | 579,922 | $ | 532,178 | ||||
| Total liabilities and equity | $ | 747,431 | $ | 706,528 | ||||
Reconciliation of Adjusted Financial Measures to GAAP Measures
In addition to its reported operating results in accordance with
The information provided on a constant currency basis reflects a comparison of current period results translated at the prior period currency rates. EXL's primary exchange rate exposure is with the Indian Rupee, the
The following table shows the reconciliation of these non-GAAP financial measures from GAAP measures for the three months ended
| Reconciliation of Adjusted Operating Income and Adjusted EBITDA | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| Three months ended |
Three months ended |
|||||||||||
| 2017 | 2016 | 2017 | ||||||||||
| Net Income (GAAP) | $ | 20,378 | $ | 16,375 | $ | 16,788 | ||||||
| add: Income tax expense | 823 | 7,008 | 3,560 | |||||||||
| subtract: Other income and foreign exchange gain, net | (5,072 | ) | (7,147 | ) | (4,446 | ) | ||||||
| Income from operations (GAAP) | $ | 16,129 | $ | 16,236 | $ | 15,902 | ||||||
| add: Stock-based compensation expense (a) | 5,107 | 4,450 | 5,956 | |||||||||
| add: Amortization of acquisition-related intangibles (b) | 3,507 | 2,718 | 3,498 | |||||||||
| Adjusted operating income (Non-GAAP) | $ | 24,743 | $ | 23,404 | $ | 25,356 | ||||||
| Adjusted operating income margin as a % of revenues (Non-GAAP) | 13.1 | % | 13.7 | % | 13.9 | % | ||||||
| add: Depreciation | 6,130 | 5,552 | 5,928 | |||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 30,873 | $ | 28,956 | $ | 31,284 | ||||||
| Adjusted EBITDA margin as a % of revenues (Non-GAAP) | 16.3 | % | 17.0 | % | 17.1 | % | ||||||
(a) To exclude stock-based compensation expense under ASC Topic 718.
(b) 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 |
|||||||||||
| 2017 | 2016 | 2017 | ||||||||||
| Net income (GAAP) | $ | 20,378 | $ | 16,375 | $ | 16,788 | ||||||
| add: Stock-based compensation expense (a) | 5,107 | 4,450 | 5,956 | |||||||||
| add: Amortization of acquisition-related intangibles (b) | 3,507 | 2,718 | 3,498 | |||||||||
| subtract: Tax impact on stock-based compensation expense (c) | (3,483 | ) | (1,600 | ) | (4,260 | ) | ||||||
| subtract: Tax impact on amortization of acquisition-related intangibles | (949 | ) | (734 | ) | (951 | ) | ||||||
| subtract: Changes in fair value of earn-out consideration (net of tax) (d) | — | (2,365 | ) | — | ||||||||
| Adjusted net income (Non-GAAP) | $ | 24,560 | $ | 18,844 | $ | 21,031 | ||||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 0.70 | $ | 0.55 | $ | 0.60 | ||||||
(a) To exclude stock-based compensation expense under ASC Topic 718.
(b) To exclude amortization of acquisition-related intangibles.
(c) Tax impact include $1,624 and
(d) To exclude change in fair value of earn-out consideration related to the RPM acquisition.
Contact:Steven N. Barlow Vice President, Investor Relations (212) 624-5913 ir@exlservice.com
Source:
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