WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global Business Process Management (BPM) services, today announced
results for the fiscal 2017 first quarter ended June 30, 2016.
Highlights – Fiscal 2017 First Quarter:
GAAP
Financials
•
Revenue of $148.0 million, up 10.3%
from $134.1 million in Q1 of last year and up 3.7% from $142.6
million last quarter
•
Profit of $12.2 million, compared to
$12.8 million in Q1 of last year and $15.9 million last
quarter
•
Diluted earnings per ADS of $0.23,
compared to $0.24 in Q1 of last year and $0.30 last quarter
Non-GAAP
Financial Measures*
•
Revenue less repair payments of $140.8
million, up 11.3% from $126.5 million in Q1 of last year and up
4.0% from $135.3 million last quarter
•
Adjusted Net Income (ANI) of $23.9
million, compared to $22.6 million in Q1 of last year and $26.9
million last quarter
•
Adjusted diluted earnings per ADS of
$0.45, compared to $0.42 in Q1 of last year and $0.50 last
quarter
Other
Metrics
•
Added 6 new clients in the quarter,
expanded 6 existing relationships
•
Days sales outstanding (DSO) at 29
days
•
Global headcount of 32,448 as of June
30, 2016
Reconciliations of the non-GAAP financial measures discussed
below to our GAAP operating results are included at the end of this
release. See also “About Non-GAAP Financial Measures.”
Revenue in the first quarter was $148.0 million, representing a
10.3% increase versus Q1 of last year and a 3.7% increase from the
previous quarter. Revenue less repair payments* in the first
quarter was $140.8 million, an increase of 11.3% year-over-year and
4.0% sequentially. Excluding exchange rate impacts, constant
currency revenue less repair payments* in the fiscal first quarter
grew 16.7% versus Q1 of last year, and 3.7% sequentially.
Year-over-year, fiscal Q1 revenue was adversely impacted by
depreciation in the British Pound, South African Rand and
Australian Dollar against the US Dollar. These headwinds were more
than offset by revenue growth driven by the addition of new clients
and the expansion of existing relationships. Year-over-year revenue
improvement was broad-based, led by growth in the Healthcare,
Retail/CPG, Shipping and Logistics, and Travel verticals.
Sequentially, revenue growth was also broad-based, and was boosted
by favorability from currency movements net of hedging.
Operating margin in the first quarter was 9.8%, as compared to
11.5% in Q1 of last year and 13.2% reported in the previous
quarter. First quarter adjusted operating margin* was 18.6%, versus
20.0% in Q1 of last year and 22.0% last quarter. On a
year-over-year basis, these margins were pressured by the impact of
our annual wage increases, balance sheet revaluation resulting from
depreciation in the British Pound, and increased compensation
associated with the India Payment of Bonus Act. In addition, our
GAAP operating margins were adversely impacted by an increase in
our share-based compensation. Partially offsetting these costs was
increased operating leverage from higher volumes. Sequentially,
margins reduced as a result of wage increases and currency
movements net of hedging. These headwinds more than offset margin
benefits from productivity improvements and higher volumes.
Profit in the fiscal first quarter was $12.2 million, as
compared to $12.8 million in Q1 of last year and $15.9 million in
the previous quarter. Adjusted net income (ANI)* in Q1 was $23.9
million, up $1.2 million as compared to Q1 of last year and down
$3.0 million from the previous quarter.
From a balance sheet perspective, WNS ended Q1 with $146.6
million in cash and investments, and no debt. In the first quarter,
the company generated $17.7 million in cash from operations, and
had $5.2 million in capital expenditures. During Q1, WNS
repurchased 750,000 ADS’s at an average price of $30.49 per ADS,
totaling $22.9 million. Days sales outstanding were 29 days, as
compared to 28 days in Q1 of last year and 28 days reported in the
previous quarter.
“During the fiscal first quarter, WNS delivered solid revenue
growth and continued to position the company for long-term success.
In Q1, we added several new strategic relationships which
highlighted our capabilities in domain expertise,
technology-enabled solutions and analytics,” said Keshav Murugesh,
WNS’s Chief Executive Officer. “Despite some of the uncertainty
surrounding the UK’s decision to leave the European Union, we
believe our underlying business momentum is stable and healthy. WNS
remains focused on investing to meet the evolving needs of our
clients, putting our balance sheet to work, executing on our core
strategies, and capitalizing on the long-term BPM opportunity.”
Fiscal 2017 Guidance
WNS is updating guidance for the fiscal year ending March 31,
2017 as follows:
- Revenue less repair payments* is
expected to be between $541 million and $569 million, up from
$531.0 million in fiscal 2016. This assumes an average GBP to USD
exchange rate of 1.30 for the remainder of fiscal 2017.
- ANI* is expected to range between $94
million and $100 million versus $103.0 million in fiscal 2016. This
assumes an average USD to INR exchange rate of 67.5 for the
remainder of fiscal 2017.
- Based on a diluted share count of 53.0
million shares, the company expects adjusted diluted earnings* per
ADS to be in the range of $1.78 to $1.89.
“The company has updated our forecast for fiscal 2017 based on
current visibility levels and exchange rates,” said Sanjay Puria,
WNS’s Chief Financial Officer. “Our revised guidance for the year
reflects growth in revenue less repair payments* of 2% to 7%, or 8%
to 14% on a constant currency* basis. We currently have 95%
visibility to the midpoint of the range.”
Conference Call
WNS will host a conference call on July 14, 2016 at 8:00 am
(Eastern) to discuss the company's quarterly results. To
participate in the call, please use the following details:
+1-888-656-9018; international dial-in +1-503-343-6030; participant
passcode 40409180. A replay will be available for one week
following the call at +1-855-859-2056; international dial-in
+1-404-537-3406; passcode 40409180, as well as on the WNS website,
www.wns.com, beginning two hours after the end of the call.
About WNS
WNS (Holdings) Limited (NYSE: WNS) is a leading global business
process management company. WNS offers business value to 200+
global clients by combining operational excellence with deep domain
expertise in key industry verticals including Travel, Insurance,
Banking and Financial Services, Manufacturing, Retail and Consumer
Packaged Goods, Shipping and Logistics, Healthcare and Utilities.
WNS delivers an entire spectrum of business process management
services such as finance and accounting, customer interaction
services, technology solutions, research and analytics and industry
specific back office and front office processes. As of June 30,
2016, WNS had 32,448 professionals across 42 delivery centers
worldwide including China, Costa Rica, India, Philippines, Poland,
Romania, South Africa, Sri Lanka, United Kingdom and the United
States. For more information, visit www.wns.com.
Safe Harbor Statement
This release contains forward-looking statements, as defined in
the safe harbor provisions of the US Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
our current expectations and assumptions about our Company and our
industry. Generally, these forward-looking statements may be
identified by the use of terminology such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “will,” “seek,” “should”
and similar expressions. These statements include, among other
things, the discussions of our strategic initiatives and the
expected resulting benefits, our growth opportunities, industry
environment, expectations concerning our future financial
performance and growth potential, including our fiscal 2016
guidance and future profitability, and expected foreign currency
exchange rates. Forward-looking statements inherently involve risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements. Such
risks and uncertainties include but are not limited to worldwide
economic and business conditions; political or economic instability
in the jurisdictions where we have operations; our dependence on a
limited number of clients in a limited number of industries;
regulatory, legislative and judicial developments; increasing
competition in the BPM industry; technological innovation;
telecommunications or technology disruptions; our liability arising
from fraud or unauthorized disclosure of sensitive or confidential
client and customer data; our ability to attract and retain
clients; negative public reaction in the US or the UK to offshore
outsourcing; our ability to expand our business or effectively
manage growth; our ability to hire and retain enough sufficiently
trained employees to support our operations; the effects of our
different pricing strategies or those of our competitors; our
ability to successfully consummate, integrate and achieve accretive
benefits from our strategic acquisitions, and to successfully grow
our revenue and expand our service offerings and market share; and
future regulatory actions and conditions in our operating areas.
These and other factors are more fully discussed in our most recent
annual report on Form 20-F filed on May 12, 2016 with the US
Securities and Exchange Commission (SEC) which is available at
www.sec.gov. We caution you not to place undue reliance on any
forward-looking statements. Except as required by law, we do not
undertake to update any forward-looking statements to reflect
future events or circumstances.
References to “$” and “USD” refer to the United States dollars,
the legal currency of the United States; references to “GBP” refer
to the British pound, the legal currency of Britain; and references
to “INR” refer to Indian Rupees, the legal currency of India.
References to GAAP refer to International Financial Reporting
Standards, as issued by the International Accounting Standards
Board (IFRS).
* See “About Non-GAAP Financial Measures” and the
reconciliations of the historical non-GAAP financial measures to
our GAAP operating results at the end of this release.
About Non-GAAP Financial
Measures
The financial information in this release is focused on non-GAAP
financial measures as we believe that they reflect more accurately
our operating performance. Reconciliations of these non-GAAP
financial measures to our GAAP operating results are included
below. A discussion of our GAAP measures is contained in “Part I –
Item 5. Operating and Financial Review and Prospects” in our annual
report on Form 20-F filed with the SEC on May 12, 2016.
For financial statement reporting purposes, WNS has two
reportable segments: WNS Global BPM and WNS Auto Claims BPM.
Revenue less repair payments is a non-GAAP financial measure that
is calculated as (a) revenue less (b) in the auto claims business,
payments to repair centers for “fault” repair cases where WNS acts
as the principal in its dealings with the third party repair
centers and its clients. WNS believes that revenue less repair
payments for “fault” repairs reflects more accurately the value
addition of the business process management services that it
directly provides to its clients. For more details, please see the
discussion in “Part I – Item 5. Operating and Financial Review and
Prospects – Overview” in our annual report on Form 20-F filed with
the SEC on May 12, 2016.
Constant currency revenue less repair payments is a non-GAAP
financial measure. We present constant currency revenue less repair
payments so that revenue less repair payments may be viewed without
the impact of foreign currency exchange rate fluctuations, thereby
facilitating period-to-period comparisons of business performance.
Constant currency revenue less repair payments is presented by
recalculating prior period’s revenue less repair payments
denominated in currencies other than in US dollars using the
foreign exchange rate used for the latest period, without taking
into account the impact of hedging gains/losses. Our non-US dollar
denominated revenues include, but are not limited to, revenues
denominated in pound sterling, South African rand, Australian
dollar and euro.
WNS also presents (1) adjusted operating margin, which refers to
adjusted operating profit (calculated as operating profit excluding
amortization of intangible assets and share-based compensation
expense) as a percentage of revenue less repair payments, and (2)
ANI, which is calculated as profit excluding amortization of
intangible assets and share-based compensation expense, and other
non-GAAP measures included in this release as supplemental measures
of its performance. WNS presents these non-GAAP measures because it
believes they assist investors in comparing its performance across
reporting periods on a consistent basis by excluding items that it
does not believe are indicative of its core operating performance.
In addition, it uses these non-GAAP measures (i) as a factor in
evaluating management’s performance when determining incentive
compensation and (ii) to evaluate the effectiveness of its business
strategies. These non-GAAP measures are not meant to be considered
in isolation or as a substitute for WNS’s financial results
prepared in accordance with IFRS.
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited, amounts in millions, except
share and per share data)
Three months ended Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Revenue $ 148.0 $ 134.1 $
142.6 Cost of revenue 98.7
88.8 92.2 Gross
profit 49.3 45.3 50.4 Operating expenses: Selling and marketing
expenses 7.7 7.4 7.4 General and administrative expenses 20.9 18.0
20.8 Foreign exchange loss/ (gain), net (0.1 ) (1.8 ) (2.8 )
Amortization of intangible assets 6.3
6.2 6.2
Operating profit 14.5 15.4 18.8 Other income, net (2.3 ) (2.2 )
(2.6 ) Finance expense 0.1
0.1 0.0 Profit
before income taxes 16.8 17.5 21.4 Provision for income taxes
4.6 4.7
5.5 Profit $ 12.2
$ 12.8 $ 15.9
Earnings per share of ordinary share Basic $ 0.24
$ 0.25 $ 0.31
Diluted $ 0.23 $ 0.24
$ 0.30
Growth of revenue (GAAP) and revenue
less repair payments (non-GAAP)
Three months ended
Three months ended
Jun 30, 2016 compared to
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Jun 30,
2015
Mar 31,
2016
(Amounts in millions) (% growth) Revenue (GAAP) $
148.0 $ 134.1 $ 142.6
10.3 % 3.7 % Less: Payments to repair
centers 7.2 7.6 7.3 (6.0 )% (1.9 )% Revenue less repair payments
(Non-GAAP) $ 140.8 $ 126.5 $ 135.3 11.3 % 4.0 % Exchange rate
impact (1.2 ) (6.9 ) (0.7 )
Constant currency revenue less repair
payments (Non-GAAP)
$ 139.6 $ 119.6 $ 134.6 16.7 % 3.7 %
Reconciliation of cost of revenue (GAAP
to non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
(Amounts in millions) Cost of revenue (GAAP) $ 98.7
$ 88.8 $ 92.2 Less: Payments to
repair centers 7.2 7.6 7.3 Less: Share-based compensation expense
0.6 0.6 0.5
Adjusted cost of revenue (excluding
payment to repair centers and share-based compensation expense)
(Non-GAAP)
$ 90.9 $ 80.6 $ 84.4
Reconciliation of gross profit (GAAP to
non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
(Amounts in millions) Gross profit (GAAP) $ 49.3 $ 45.3
$ 50.4 Add: Share-based compensation expense
0.6 0.6 0.5 Adjusted gross profit (excluding share-based
compensation expense) (Non-GAAP) $ 49.9 $ 45.9 $ 50.9
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Gross profit as a percentage of revenue (GAAP) 33.3 % 33.8 %
35.3 % Adjusted gross profit (excluding share-based compensation
expense) as a percentage of revenue less repair payments (Non-GAAP)
35.4 % 36.3 % 37.6 %
Reconciliation of selling and marketing
expenses (GAAP to non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
(Amounts in millions) Selling and marketing expenses (GAAP)
$ 7.7 $ 7.4 $ 7.4 Add:
Share-based compensation expense 0.3 0.5 0.3 Adjusted selling and
marketing expenses (excluding share-based compensation expense)
(Non-GAAP) $ 7.4 $ 6.9 $ 7.1
Three months
ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Selling and marketing expenses as a percentage of revenue (GAAP)
5.2 % 5.5 %
5.2 % Adjusted selling and marketing expenses (excluding
share-based compensation expense) as a percentage of revenue less
repair payments (Non-GAAP) 5.3 % 5.5 % 5.2 %
Reconciliation of general and
administrative expenses (GAAP to non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
(Amounts in millions) General and administrative expenses
(GAAP) $ 20.9 $ 18.0 $
20.8 Less: Share-based compensation expense 4.5 2.6 3.9
Adjusted general and administrative
expenses (excluding share-based compensation expense)
(Non-GAAP)
$ 16.4 $ 15.4 $ 16.9
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
General and administrative expenses as a percentage of revenue
(GAAP) 14.1 % 13.5 % 14.6 %
Adjusted general and administrative
expenses (excluding share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP)
11.6 % 12.2 % 12.5 %
Reconciliation of operating profit
(GAAP to non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
(Amounts in millions) Operating profit (GAAP) $ 14.5 $ 15.4
$ 18.8 Add: Amortization of intangible assets
6.3 6.2 6.2 Add: Share-based compensation expense 5.4 3.7 4.8
Adjusted operating profit (excluding amortization of intangible
assets and share-based compensation expense) (Non-GAAP) $ 26.3 $
25.3 $ 29.8
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Operating profit as a percentage of revenue (GAAP) 9.8 % 11.5 %
13.2 % Adjusted operating profit (excluding amortization of
intangible assets and share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP) 18.6 % 20.0 %
22.0 %
Reconciliation of profit (GAAP to
non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
(Amounts in millions) Profit (GAAP) $ 12.2
$ 12.8 $ 15.9 Add: Amortization of
intangible assets 6.3 6.2 6.2 Add: Share-based compensation expense
5.4 3.7 4.8 Adjusted net income (excluding amortization of
intangible assets and share-based compensation expense) (Non-GAAP)
$ 23.9 $ 22.6 $ 26.9
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Profit as a percentage of revenue (GAAP) 8.2 % 9.5 % 11.1 %
Adjusted net income (excluding amortization of intangible assets
and share-based compensation expense) as a percentage of revenue
less repair payments (Non-GAAP) 17.0 % 17.9 % 19.9 %
Reconciliation of basic income per ADS
(GAAP to non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Basic earnings per ADS (GAAP) $ 0.24 $ 0.25 $ 0.31 Add: Adjustments
for amortization of intangible assets and share-based compensation
expense 0.23 0.19 0.21 Adjusted basic net income per ADS (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 0.47 $ 0.44 $ 0.52
Reconciliation of diluted income per
ADS (GAAP to non-GAAP)
Three months ended
Jun 30,
2016
Jun 30,
2015
Mar 31,
2016
Diluted earnings per ADS (GAAP) $ 0.23 $ 0.24 $ 0.30 Add:
Adjustments for amortization of intangible assets and share-based
compensation expense 0.22 0.18
0.20
Adjusted diluted net income per ADS (excluding amortization of
intangible assets and share-based compensation expense) (Non-GAAP)
$ 0.45 $ 0.42 $ 0.50
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(Unaudited, amounts in millions, except
share and per share data)
As at
Jun 30,
2016
As at
Mar 31,
2016
ASSETS Current assets: Cash and cash equivalents $ 64.4 $
41.9 Investments 82.1 133.0 Trade receivables, net 58.1 54.9
Unbilled revenue 45.5 44.3 Funds held for clients 11.3 11.9
Derivative assets 19.4 13.9 Prepayments and other current assets
23.1 22.6 Total current assets 304.0 322.5
Non-current assets: Goodwill 73.3 76.2 Intangible assets 22.0 27.1
Property and equipment 47.8 50.4 Derivative assets 6.8 4.8 Cash
consideration, pending allocation 11.7
–
Investments 0.1
–
Deferred tax assets 21.3 22.5 Other non-current assets 27.0
21.8 Total non-current assets 209.9 203.0
TOTAL ASSETS $ 513.9 $ 525.5
LIABILITIES AND EQUITY Current liabilities: Trade
payables $ 18.7 $ 19.9 Provisions and accrued expenses 23.1 24.7
Derivative liabilities 11.7 3.3 Pension and other employee
obligations 35.8 44.8 Deferred revenue 4.5 2.9 Current taxes
payable 5.1 1.7 Other liabilities 8.4 6.0 Total
current liabilities 107.2 103.3 Non-current liabilities: Derivative
liabilities 0.7 0.5 Pension and other employee obligations 9.9 6.9
Deferred revenue 0.2 0.3 Other non-current liabilities 4.7 4.5
Deferred tax liabilities 2.1 1.8 Total non-current
liabilities 17.6 13.9
TOTAL LIABILITIES
124.7 117.3 Shareholders' equity: Share capital
(ordinary shares $0.16 (10 pence) par value, authorized 60,000,000
shares; issued: 52,667,089 shares and 52,406,304 shares;
outstanding: 50,817,089 shares and 51,306,304 shares; each as at
June 30, 2016 and March 31, 2016, respectively) 8.2 8.2 Share
premium 312.4 306.9 Retained earnings 252.4 240.2 Other components
of equity (130.6 ) (116.7 ) Total shareholders’ equity including
shares held in treasury 442.5 438.6 Less: 1,850,000 shares as of
June 30, 2016 and 1,100,000 shares as of March 31, 2016, held in
treasury, at cost (53.4 ) (30.5 ) Total shareholders’
equity 389.1 408.2
TOTAL LIABILITIES AND
EQUITY $ 513.9 $ 525.5
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version on businesswire.com: http://www.businesswire.com/news/home/20160714005478/en/
WNS (Holdings)
LimitedInvestors:David
MackeyCorporate SVP – Finance & Head of Investor
Relations+1 (201)
942-6261david.mackey@wns.comorMedia:Archana
RaghuramHead – Corporate Communications+91 (22) 4095
2397archana.raghuram@wns.compr@wns.com
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