- Q1 Diluted EPS of $0.40
with Revenues of $51.4 million
Ebix, Inc. (Nasdaq:EBIX), a leading international supplier of
On-Demand software and E-commerce services to the insurance
industry, today reported results for the fiscal first quarter ended
March 31, 2014.
Ebix delivered the following results for the first quarter of
2014:
Revenues: Total Q1 2014 revenue was $51.4
million, a decrease of 2% on a year-over-year basis, as compared to
Q1 2013 revenue of $52.6 million and a sequential increase of $0.60
million over Q4 2013 revenue of $50.8 million.
On a constant currency basis, Ebix Q1 2014 revenue increased
year over year to $53.3 million as compared to $52.6 million in Q1
of 2013. The Company's Q1 2014 revenues, on a constant currency
basis, increased by $1.0 million from $50.8 million for Q4 of
2013.
Earnings per Share: Q1 2014 diluted earnings
per share declined 11% year-over-year to $0.40, as compared to
$0.45 in the first quarter of 2013. For purposes of the Q1 2014 EPS
calculation, there was an average of 38.6 million diluted shares
outstanding during the quarter, as compared to 38.8 million diluted
shares outstanding in Q1 2013.
Operating Cash: Cash generated from operations
Q1 2014 was $10.8 million, down 24% year-over-year as compared to
$14.3 million in Q1 2013. The operating cash was impacted primarily
by the $4.2 million payment made in Q1 2014 for the securities
litigation settlement in addition to tax payments of $3.1 million
made in Q1 of 2014, including $2.7 million of minimum alternative
tax payments in India.
Operating Income and Margins: Operating income
for Q1 2014 of $19.4 million was essentially flat as compared to
the $19.3 million of operating income from a year back at Q1 2013.
Operating margins, though, for Q1 2014 were higher at 38% as
compared to 37% for Q1 2013.
Net Income: Q1 2014 net income
was $15.4 million, an 11% decrease on a year-over-year basis, as
compared to Q1 2013 net income of $17.3 million primarily owing to
an increase in the effective tax rate (net of discrete items) to
12.0% from 8.3% a year ago.
Q2 2014 Diluted Share Count: As of today, the
Company expects the diluted share count for Q2 2014 to be
approximately 38.5 million.
Channel Revenues: The Exchange channel
continued to be the largest channel for Ebix accounting for 82% of
the Company's Q1 2014 Revenues.
|
|
(dollar amounts in
thousands) |
Three Months
Ended March 31, |
Channel |
2014 |
2013 |
Exchanges |
$ 42,105 |
$ 41,686 |
Broker Systems |
4,486 |
4,722 |
Risk Compliance Solutions ("RCS") , fka
Business Process Outsourcing ("BPO") |
3,425 |
4,164 |
Carrier Systems |
1,388 |
1,994 |
Total Revenue |
$ 51,404 |
$ 52,566 |
The continuing strengthening of the US dollar as compared to the
Australian dollar and the Brazilian Real decreased revenue by $1.9
million across the Exchange and Broker Systems Channels. The RCS
channel's quarter over quarter revenue from its core certificate
tracking and creation business was essentially flat, with the
decline in revenues due to the non-recurring nature of certain
third party software development activities undertaken a year ago
for CurePet which is now 100% owned by Ebix as of January 2014.
Ebix Chairman, President & CEO Robin Raina said, "I am
pleased with these revenue numbers as they represent sequential and
year over year growth, on a constant currency basis. This is in
spite of many factors that had the impact of affecting our revenues
adversely. Firstly, our revenues in Europe were impacted by the
various market entities delaying any new decisions in Q1 of 2014,
in view of a prospective aggregation utility deal in London with
Ebix. Secondly, with the acquisition of the pet exchange, we
did not have the development revenues received from CurePet as
their Development partner in 2013. Thirdly, as stated in 2013, we
had to bear the continuing impact of decreased professional
services revenues from the delays associated with certain
PlanetSoft implementations."
Robin said, "The quarter also marked a few key events for us on
the customer front. Our Ebix Enterprise straight through processing
Health solution went into production with two leading US based
health carriers – IHC and Security Life, in the first quarter. The
platform represents more than two years of work from inception, to
delivery to successful execution making Ebix's product the only
end-to-end cloud based Health straight through processing solution
in the market. Also we are pleased to have the world's largest
retailer in Canada, Walmart sign a contract in Q1 and go into
production in April, as our client on our vendor pay model RCS
solution."
Robin added, "We feel good about our direction – both in terms
of vision and depth of offering. We now have successful enterprise
solutions with references, which allows us to bid for large
recurring revenue deals, that have high margins associated with
them. If we can close in on some of the large deals in play at
present, we will be able to impact both our revenue and margins
meaningfully in future quarters."
Ebix EVP and CFO Robert Kerris said, "Ebix ended the quarter
with combined cash, cash equivalent, and short-term investments of
$58.6 million slightly higher the $57.5 million held at December
31st 2013. The Company's balance sheet has been further
strengthened with a net cash position at quarter-end of $3.3
million as compared to net debt of $179,000 on December 31,
2013. Of particular note is that during quarter the company
reduced debt by $2.5 million, disbursed $4.2 million in settlement
of the class action lawsuit, paid $3.1 million in taxes,
repurchased $2.2 million of stock, and paid $2.9 million in
dividends to our stockholders. As of May 9th, the Company is in a
net cash position of approximately $6.1 million."
Robert added, "Our working capital position was $47.0 million at
March 31st up from $35.7 million on December 31st and up from $32.1
million from a year earlier at the end of Q1 2013 primarily due to
the $10.8 million of additional cash generated by our operating
activities resulting in higher cash balances, and increased trade
receivables. Finally, our operating performance remains strong as
demonstrated by this past quarter's operating margin of
38%."
About Ebix, Inc.
A leading international supplier of On-Demand software and
E-commerce services to the insurance industry, Ebix, Inc.,
(Nasdaq:EBIX) provides end-to-end solutions ranging from
infrastructure exchanges, carrier systems, agency systems and risk
compliance solutions to custom software development for all
entities involved in the insurance industry.
With 35+ offices across Australia, Brazil, Canada, India, New
Zealand, Singapore, the US and the UK, Ebix powers multiple
exchanges across the world in the field of life, annuity, health
and property & casualty insurance. Through its various
SaaS-based software platforms, Ebix employs hundreds of insurance
and technology professionals to provide products, support and
consultancy to thousands of customers on six continents. For more
information, visit the Company's website at www.ebix.com.
SAFE HARBOR REGARDING FORWARD-LOOKING
STATEMENTS
As used herein, the terms "Ebix," "the Company," "we," "our" and
"us" refer to Ebix, Inc., a Delaware corporation, and its
consolidated subsidiaries as a combined entity, except where it is
clear that the terms mean only Ebix, Inc.
The information contained in this Press Release contains
forward-looking statements and information within the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, and Section 21E of the
Securities Exchange Act of 1934. This information includes
assumptions made by, and information currently available to
management, including statements regarding future economic
performance and financial condition, liquidity and capital
resources, acceptance of the Company's products by the market, and
management's plans and objectives. In addition, certain statements
included in this and our future filings with the Securities and
Exchange Commission ("SEC"), in press releases, and in oral and
written statements made by us or with our approval, which are not
statements of historical fact, are forward-looking statements.
Words such as "may," "could," "should," "would," "believe,"
"expect," "anticipate," "estimate," "intend," "seeks," "plan,"
"project," "continue," "predict," "will," "should," and other words
or expressions of similar meaning are intended by the Company to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words. These
forward-looking statements are found at various places throughout
this report and in the documents incorporated herein by reference.
These statements are based on our current expectations about future
events or results and information that is currently available to
us, involve assumptions, risks, and uncertainties, and speak only
as of the date on which such statements are made.
Our actual results may differ materially from those expressed or
implied in these forward-looking statements. Factors that may cause
such a difference, include, but are not limited to those discussed
in our Annual Report on Form 10-K and subsequent reports filed with
the SEC, as well as: the risk of an unfavorable outcome of the
pending governmental investigations or shareholder class action
lawsuits, reputational harm caused by such investigations and
lawsuits, the willingness of independent insurance agencies to
outsource their computer and other processing needs to third
parties; pricing and other competitive pressures and the Company's
ability to gain or maintain share of sales as a result of actions
by competitors and others; changes in estimates in critical
accounting judgments; changes in or failure to comply with laws and
regulations, including accounting standards, taxation requirements
(including tax rate changes, new tax laws and revised tax
interpretations) in domestic or foreign jurisdictions; exchange
rate fluctuations and other risks associated with investments and
operations in foreign countries (particularly in Australia and
India wherein we have significant operations); equity markets,
including market disruptions and significant interest rate
fluctuations, which may impede our access to, or increase the cost
of, external financing; and international conflict, including
terrorist acts.
Except as expressly required by the federal securities laws, the
Company undertakes no obligation to update any such factors, or to
publicly announce the results of, or changes to any of the
forward-looking statements contained herein to reflect future
events, developments, changed circumstances, or for any other
reason.
Readers should carefully review the disclosures and the risk
factors described in the documents we file from time to time with
the SEC, including future reports on Forms 10-Q and 8-K, and any
amendments thereto.
You may obtain our SEC filings at our website, www.ebix.com
under the "Investor Information" section, or over the Internet at
the SEC's web site, www.sec.gov.
Ebix, Inc. and
Subsidiaries |
Condensed Consolidated
Statements of Income |
(In thousands, except per share
data) |
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2014 |
2013 |
Operating revenue |
$ 51,404 |
$ 52,566 |
|
|
|
Operating expenses: |
|
|
Cost of services provided |
9,612 |
9,891 |
Product development |
6,693 |
7,035 |
Sales and marketing |
3,301 |
3,912 |
General and administrative, net |
9,841 |
9,971 |
Amortization and depreciation |
2,552 |
2,452 |
Total operating expenses |
31,999 |
33,261 |
|
|
|
Operating income |
19,405 |
19,305 |
Interest income |
135 |
93 |
Interest expense |
(247) |
(362) |
Non-operating income - put options |
454 |
82 |
Foreign currency exchange loss |
(119) |
(170) |
Income before income taxes |
19,628 |
18,948 |
Income tax expense |
(4,211) |
(1,604) |
Net income |
$ 15,417 |
$ 17,344 |
|
|
|
Basic earnings per common
share |
$ 0.40 |
$ 0.47 |
|
|
|
Diluted earnings per common
share |
$ 0.40 |
$ 0.45 |
|
|
|
Basic weighted average shares
outstanding |
38,318 |
37,168 |
|
|
|
Diluted weighted average shares
outstanding |
38,600 |
38,779 |
|
Ebix, Inc. and
Subsidiaries |
Condensed Consolidated
Balance Sheets |
(In thousands, except share
amounts) |
|
|
|
|
March 31,
2014 |
December 31,
2013 |
ASSETS |
(Unaudited) |
|
Current assets: |
|
|
Cash and cash equivalents |
$ 57,728 |
$ 56,674 |
Short-term investments |
845 |
801 |
Trade accounts receivable, less allowances of
$1,143 and $1,049, respectively |
42,210 |
39,070 |
Deferred tax asset, net |
— |
256 |
Other current assets |
5,032 |
5,548 |
Total current
assets |
105,815 |
102,349 |
|
|
|
Property and equipment, net |
8,309 |
8,528 |
Goodwill |
341,744 |
337,068 |
Intangibles, net |
49,744 |
50,734 |
Indefinite-lived intangibles |
30,887 |
30,887 |
Deferred tax asset, net |
14,237 |
12,194 |
Other assets |
1,626 |
3,682 |
Total assets |
$
552,362 |
$
545,442 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued liabilities |
$ 17,827 |
$ 17,818 |
Accrued payroll and related benefits |
4,390 |
6,482 |
Short term debt |
13,406 |
13,062 |
Current portion of long term debt and capital
lease obligations, net of discount of $0 and $10, respectively |
827 |
827 |
Current deferred rent |
227 |
254 |
Contingent liability for accrued earn-out
acquisition consideration |
2,384 |
4,137 |
Liability – securities litigation
settlement |
— |
4,226 |
Put option liability |
391 |
845 |
Deferred revenue |
19,173 |
18,918 |
Deferred tax liability, net |
64 |
— |
Other current liabilities |
110 |
106 |
Total current
liabilities |
58,799 |
66,675 |
|
|
|
Revolving line of credit |
22,840 |
22,840 |
Long term debt and capital lease obligations,
less current portion, net of discount of $38 and $38,
respectively |
17,319 |
20,124 |
Other liabilities |
8,116 |
4,719 |
Contingent liability for accrued earn-out
acquisition consideration |
11,992 |
10,283 |
Deferred revenue |
468 |
391 |
Long term deferred rent |
2,030 |
2,185 |
Total liabilities |
121,564 |
127,217 |
|
|
|
Temporary equity |
5,000 |
5,000 |
|
|
|
Stockholders' equity: |
|
|
Preferred stock, $0.10 par value, 500,000
shares authorized, no shares issued and outstanding at March 31,
2014 and December 31, 2013 |
— |
— |
Common stock, $0.10 par value, 60,000,000
shares authorized, 38,424,596 issued and 38,384,087 outstanding at
March 31, 2014 and 38,088,391 issued and 38,047,882 outstanding at
December 31, 2013 |
3,838 |
3,805 |
Additional paid-in capital |
163,107 |
164,216 |
Treasury stock (40,509 shares as of March 31,
2014 and December 31, 2013) |
(76) |
(76) |
Retained earnings |
270,095 |
257,574 |
Accumulated other comprehensive loss |
(11,166) |
(12,294) |
Total stockholders'
equity |
425,798 |
413,225 |
Total liabilities and stockholders'
equity |
$
552,362 |
$
545,442 |
|
Ebix, Inc. and
Subsidiaries |
Condensed
Consolidated Statements of Cash Flows |
(In thousands) |
(Unaudited) |
|
|
|
|
Three
Months Ended |
|
March
31, |
|
2014 |
2013 |
Cash flows from operating activities: |
|
|
Net income |
$ 15,417 |
$ 17,344 |
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation and amortization |
2,552 |
2,452 |
Provision (benefit) for deferred taxes |
(441) |
(7,538) |
Share based compensation |
395 |
511 |
Provision for doubtful accounts |
353 |
— |
Debt discount amortization on promissory note
payable |
10 |
13 |
Unrealized foreign exchange (gain) loss |
216 |
9 |
(Gain) loss on put option |
(454) |
(81) |
Reduction of acquisition earnout
accruals |
(1,762) |
(299) |
Changes in assets and liabilities,
net of effects from acquisitions: |
|
|
Accounts receivable |
(4,716) |
(2,234) |
Other assets |
576 |
357 |
Accounts payable and accrued expenses |
(65) |
4,719 |
Accrued payroll and related benefits |
1,029 |
(643) |
Deferred revenue |
(2) |
(350) |
Deferred rent |
(163) |
44 |
Reserve for potential uncertain income tax
return positions |
2,133 |
68 |
Liability - securities litigation settlement
payment |
(4,218) |
— |
Other liabilities |
(56) |
(107) |
Net cash provided by operating
activities |
10,804 |
14,265 |
|
|
|
Cash flows from investing
activities: |
|
|
Acquisition of Curepet, Inc., net of cash
acquired |
3 |
— |
Investment in USIX |
— |
(570) |
Maturities of marketable securities |
— |
208 |
Purchases of marketable securities |
(10) |
— |
Capital expenditures |
(413) |
(345) |
Net cash used in investing
activities |
(420) |
(707) |
|
|
|
Cash flows from financing
activities: |
|
|
Principal payments of term loan
obligation |
(2,406) |
(4,125) |
Repurchases of common stock |
(2,234) |
— |
Excess tax benefit from share-based
compensation |
(3,200) |
— |
Proceeds from the exercise of stock
options |
788 |
553 |
Forfeiture of certain shares to satisfy
exercise costs and the recipients income tax obligations related to
stock options exercised and restricted stock vested |
(25) |
(564) |
Dividend payments |
(2,896) |
(2,794) |
Principal payments of debt obligations |
(9) |
(12) |
Payments of capital lease obligations |
(56) |
(80) |
Net cash used in financing
activities |
(10,038) |
(7,022) |
Effect of foreign exchange rates on cash |
708 |
20 |
Net change in cash and cash
equivalents |
1,054 |
6,556 |
Cash and cash equivalents at the
beginning of the period |
56,674 |
36,449 |
Cash and cash equivalents at the
end of the period |
$ 57,728 |
$ 43,005 |
Supplemental disclosures of cash flow
information: |
|
|
Interest paid |
$ 208 |
$ 352 |
Income taxes paid |
$ 3,087 |
$ 3,548 |
CONTACT: Steven N. Barlow Vice President - Investor Relations
678-281-2043 or steve.barlow@ebix.com
or
Aaron Tikkoo
678 -281-2027 or atikkoo@ebix.com
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