Ebix, Inc. (NASDAQ:EBIX), a leading international supplier of
On-Demand software and E-commerce services to the insurance,
financial, e-governance and healthcare industries, today reported
results for its first quarter ended March 31, 2018. Ebix will host
a conference call to review its results today at 11:00 a.m. EDT
(details below).
Ebix delivered the following results for the
first quarter of 2018:
Revenue: Q1 2018 revenue rose
37% to $108.2 million compared to $79.1 million in Q1 2017 and
increased 3% over Q4 2017 revenue of $104.7 million. The year over
year revenue improvement reflected growth in the Company’s Exchange
channel as well as higher revenue from the Risk Compliance channel,
with the revenues from the EbixCash Financial Exchange reflected in
the Exchange channel.
On a constant currency basis, Ebix Q1 2018
revenue increased 35% to $107.2 million compared to $79.1 million
in Q1 2017. The Exchange channel continued to be Ebix’s largest,
accounting for 76% of Q1 2018 revenues.
|
|
|
(dollar amounts in thousands) |
|
|
Channel |
Q1 2018 |
Q1 2017 |
Change |
Exchanges |
$ |
81,858 |
$ |
52,614 |
+56 |
% |
Risk Compliance
Solutions (RCS) |
|
22,267 |
|
21,852 |
+2 |
% |
Broker Solutions |
|
3,610 |
|
3,788 |
-5 |
% |
Carrier Systems |
|
495 |
|
849 |
-42 |
% |
Total
Revenue |
$ |
108,230 |
$ |
79,103 |
+37 |
% |
|
|
|
|
Total Revenue
on Constant Currency Basis |
$ |
107.2 |
$ 79.1M |
+35 |
% |
|
|
|
|
|
|
Operating Income and Margins:
Q1 2018 operating margins decreased to 31% as compared to 32% in Q1
2017. Operating income for Q1 2018 rose 32% to $33.9 million
compared to $25.7 million in Q1 2017.
Net Income: Q1
2018 net income decreased 1% to $26.2 million compared to $26.4
million in Q1 2017, despite the 32% increase in operating income.
The decrease principally reflected an $8.4 million increase in
non-operating expenses like foreign exchange loss, net interest
charges and tax expense from Q1 2017 to Q1 2018, as follows:
- a $0.6 million foreign exchange loss in Q1 2018 vs. a gain of
$3.5 million in Q1 2017
- a $3.0 million increase in net interest expense in Q1 2018 vs.
Q1 2017
- a $2.1 million tax expense in Q1 2018 vs. $0.9 million in Q1
2017. The Q1 2018 taxes reflect a provision for the Global
Intangible Low- Taxed Income (“GILTI”) tax, as per the 2017 Tax
Cuts and Jobs Act.
Earnings per Share: Q1
2018 diluted earnings per share were unchanged from Q1 2017 at
$0.83. Ebix’s weighted average diluted shares outstanding decreased
to 31.7 million in Q1 2018 compared to 32.0 million in Q1 2017 and
31.7 million in Q4 2017, reflecting the benefit of share repurchase
activity.
Operating Cash: Cash generated
from operations rose $9.7 million or 61% in Q1 2018 to $25.5
million compared to $15.8 million in Q1 2017. Q1 2018 cash flows
reflected cumulative cash payment of $11.0 million for bank
interest and income tax, including non-recurring advance Minimum
Alternate Tax (MAT) payments in India.
Share Repurchases: In Q1 2018,
Ebix repurchased 30,000 shares of its outstanding common stock for
aggregate cash consideration of $2.2 million that were settled in
April 2018.
Q2 2018 Diluted Share Count: As
of today, Ebix expects its diluted share count for Q2 2018 to be
approximately 31.7 million.
Dividend: Ebix paid its
regularly quarterly dividend of $0.075 per share in Q1 2018 for a
total cost of $2.4 million.
Ebix Chairman, President and CEO Robin Raina
said, “We are pleased to start 2018 with record revenue and
operating income and a 61% increase in cash generated from
operations. With a worldwide annualized revenue run rate of
approximately $433 million as of Q1 2018, we believe that we are
well on track to surpass our half a Billion-dollar annualized
revenue run rate aspirational goal by year end or perhaps
earlier.”
Robin said, “From a business development
standpoint, Q1 was strong as we secured a few substantial contracts
that involve implementations that should contribute to our results
over the balance of 2018 and 2019. We faced head winds in Q1 2018
that impacted our sequential revenue comparison with Q4 2017 by $5
million, including a $4 million reduction in our Continuing
Education and Health administration exchange segment in Q1 2018,
related to seasonal revenue increases in Q4 2017, and approximately
$1 million in lower transaction volumes in Q1 2018 because of
certain regulatory guidelines associated with the new “Know Your
Customer” rule implementation in India. We are pleased that in
spite of those factors, Ebix achieved a $3.6 million sequential
revenue improvement in Q1 2018 as compared to Q4 2017.”
“Our Indian operations continue to grow in terms
of top line and bottom line both. Our EbixCash retail outlet count
in India is now approaching 260,000 and we have over 500 sales
people on the ground committed to organically growing our outlet
footprint as well as the customer penetration of our EbixCash
business. With India business contributing $32.9 million in
revenues in Q1 2018 as compared to $5.6 million in Q1 2017, we are
now targeting an annualized revenue run rate of $200 million or
more by Q4 2018.”
Sean Donaghy, Ebix CFO said, “In Q1 2018 Ebix
continued to demonstrate solid cash generation to fund growth and
investor friendly initiatives, with cash flow from operations
increasing to $25.5 million. During Q1 2018, we spent $9.7 million
on dividends, tax payments and building construction. Specifically,
in Q1 2018 we paid taxes of $6.8 million; invested $531 thousand on
building capex; invested $6.6 million for the purchase of the
Transcorp inward remittance assets; and returned $2.4 million in
dividends to shareholders, while we drew only $20.0 million from
our Bank credit facilities. Ebix ended the quarter with $130.3
million of cash, cash equivalents, and short-term investments, an
increase of $40.8 million as compared to December 31, 2017.”
Conference Call Details:
Call Date/Time: |
Wednesday, May 9, 2018 at 11:00 a.m. EDT |
Call Dial-In: |
+1-877-837-3909 or 1-973-409-9690; Call ID # 7585634 |
Live Audio Webcast: |
www.ebix.com/webcast |
Audio Replay URL: |
www.ebix.com/result_18_Q1 after 2:00 p.m. EDT on May 9th |
About Ebix, Inc.
With 50+ offices across 5 continents, Ebix,
Inc., (NASDAQ:EBIX) endeavors to provide On-Demand software and
E-commerce services to the insurance, financial and healthcare
industries. In the Insurance sector, the Company’s main focus is to
develop and deploy a wide variety of insurance and reinsurance
exchanges on an on-demand basis, while also, providing
Software-as-a-Service ("SaaS") enterprise solutions in the area of
CRM, front-end & back-end systems, outsourced administrative
and risk compliance, across the world.
With a "Phygital” strategy that combines 260,000
physical distribution outlets in many Southeast Asian Nations
(“ASEAN”) countries to an Omni-channel online digital platform, the
Company’s EbixCash Financial exchange portfolio encompasses
leadership in areas of domestic & international money
remittance, travel, pre-paid & gift cards, utility payments,
etc., in an emerging country like India. EbixCash, through its
travel portal Via.com, is also one of Southeast Asia’s leading
travel exchanges with over 110,000 distribution outlets and 8,000
corporate clients processing over 24.5 million transactions every
year. For further details, visit www.ebixcash.com
Through its various SaaS-based software
platforms, Ebix employs thousands of domain-specific 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, UK 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, |
|
2018 |
|
2017 |
Operating
revenue |
$ |
108,230 |
|
|
$ |
79,103 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Cost of services
provided |
39,591 |
|
|
25,187 |
|
Product
development |
8,434 |
|
|
8,350 |
|
Sales and
marketing |
3,998 |
|
|
4,337 |
|
General and
administrative, net |
19,504 |
|
|
12,684 |
|
Amortization and
depreciation |
2,807 |
|
|
2,855 |
|
Total
operating expenses |
74,334 |
|
|
53,413 |
|
|
|
|
|
Operating income |
33,896 |
|
|
25,690 |
|
Interest income |
121 |
|
|
774 |
|
Interest expense |
(4,847 |
) |
|
(2,468 |
) |
Non-operating
income |
53 |
|
|
— |
|
Foreign currency
exchange (loss) gain |
(641 |
) |
|
3,496 |
|
Income before income
taxes |
28,582 |
|
|
27,492 |
|
Income tax expense |
(2,126 |
) |
|
(869 |
) |
Net income
including noncontrolling interest |
26,456 |
|
|
26,623 |
|
Net income attributable
to noncontrolling interest |
248 |
|
|
196 |
|
Net income
attributable to Ebix, Inc. |
$ |
26,208 |
|
|
$ |
26,427 |
|
|
|
|
|
Basic earnings
per common share attributable to Ebix, Inc. |
$ |
0.83 |
|
|
$ |
0.83 |
|
|
|
|
|
Diluted
earnings per common share attributable to Ebix, Inc. |
$ |
0.83 |
|
|
$ |
0.83 |
|
|
|
|
|
Basic weighted average
shares outstanding |
31,482 |
|
|
31,807 |
|
|
|
|
|
Diluted weighted
average shares outstanding |
31,659 |
|
|
31,973 |
|
|
|
|
|
|
|
|
Ebix, Inc. and Subsidiaries |
Condensed Consolidated Balance
Sheets |
(In thousands, except share amounts) |
|
|
March 31, 2018 |
|
December 31,
2017 |
ASSETS |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
111,898 |
|
|
$ |
63,895 |
|
Short-term
investments |
18,356 |
|
|
25,592 |
|
Restricted cash |
3,992 |
|
|
4,040 |
|
Fiduciary funds-
restricted |
8,645 |
|
|
8,035 |
|
Trade accounts
receivable, less allowances of $5,138 and $4,143, respectively |
117,443 |
|
|
117,838 |
|
Other current
assets |
30,533 |
|
|
33,532 |
|
Total current assets |
290,867 |
|
|
252,932 |
|
|
|
|
|
Property and equipment,
net |
40,647 |
|
|
41,704 |
|
Goodwill |
672,159 |
|
|
666,863 |
|
Intangibles, net |
43,679 |
|
|
45,711 |
|
Indefinite-lived
intangibles |
42,055 |
|
|
42,055 |
|
Capitalized software
development costs, net |
8,659 |
|
|
8,499 |
|
Deferred tax asset,
net |
48,489 |
|
|
43,529 |
|
Other assets |
15,889 |
|
|
11,720 |
|
Total
assets |
$ |
1,162,444 |
|
|
$ |
1,113,013 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable and
accrued liabilities |
$ |
77,231 |
|
|
$ |
75,073 |
|
Accrued payroll and
related benefits |
7,235 |
|
|
8,201 |
|
Cash overdraft |
9,941 |
|
|
9,243 |
|
Fiduciary funds-
restricted |
8,645 |
|
|
8,035 |
|
Short term debt, net of
deferred financing costs of $449 and $136, respectively |
13,824 |
|
|
14,364 |
|
Capital lease
obligations |
17 |
|
|
17 |
|
Deferred rent |
205 |
|
|
278 |
|
Contingent liability
for accrued earn-out acquisition consideration |
4,000 |
|
|
4,000 |
|
Deferred revenue |
27,492 |
|
|
22,562 |
|
Other current
liabilities |
10,085 |
|
|
5,159 |
|
Total current liabilities |
158,675 |
|
|
146,932 |
|
|
|
|
|
Revolving line of
credit |
173,694 |
|
|
274,529 |
|
Long term debt and
capital lease obligations, less current portion, net of deferred
financing costs of $1,748 and $298, respectively |
235,778 |
|
|
110,978 |
|
Other liabilities |
11,632 |
|
|
11,658 |
|
Contingent liability
for accrued earn-out acquisition consideration |
32,511 |
|
|
33,096 |
|
Deferred revenue |
8,822 |
|
|
1,423 |
|
Deferred rent |
405 |
|
|
638 |
|
Total
liabilities |
621,517 |
|
|
579,254 |
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
Preferred stock, $0.10
par value, 500,000 shares authorized, no shares issued and
outstanding at March 31, 2018 and December 31, 2017 |
— |
|
|
— |
|
Common stock, $0.10 par
value, 120,000,000 shares authorized, 31,458,976 issued and
outstanding, at March 31, 2018, 2017 and 120,000,000 shares
authorized, 31,476,428 issued and outstanding at December 31,
2017 |
3,146 |
|
|
3,148 |
|
Additional paid-in
capital |
— |
|
|
1,410 |
|
Retained earnings |
523,668 |
|
|
510,975 |
|
Accumulated other
comprehensive loss |
(28,782 |
) |
|
(24,023 |
) |
Total Ebix,
Inc. stockholders’ equity |
498,032 |
|
|
491,510 |
|
Noncontrolling
interest |
42,895 |
|
|
42,249 |
|
Total
stockholders' equity |
540,927 |
|
|
533,759 |
|
Total
liabilities and stockholders’ equity |
$ |
1,162,444 |
|
|
$ |
1,113,013 |
|
|
|
|
|
|
|
|
|
|
Ebix, Inc. and Subsidiaries |
Condensed Consolidated
Statements of Cash Flows |
(In thousands) |
(Unaudited) |
|
|
Three Months Ended |
|
March 31, |
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
Net income attributable
to Ebix, Inc. |
$ |
26,208 |
|
|
$ |
26,427 |
|
Net income attributable
to noncontrolling interest |
248 |
|
|
196 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
Amortization and
depreciation |
2,807 |
|
|
2,855 |
|
Benefit for deferred
taxes |
(1,874 |
) |
|
(850 |
) |
Share based
compensation |
753 |
|
|
686 |
|
Provision for doubtful
accounts |
1,045 |
|
|
407 |
|
Unrealized foreign
exchange loss (gain) |
419 |
|
|
(860 |
) |
Amortization of
capitalized software development costs |
525 |
|
|
410 |
|
Purchase accounting
adjustment |
— |
|
|
(948 |
) |
Changes in
assets and liabilities, net of effects from
acquisitions: |
|
|
|
Accounts
receivable |
(1,401 |
) |
|
(5,661 |
) |
Other assets |
(554 |
) |
|
198 |
|
Accounts payable and
accrued expenses |
1,438 |
|
|
(7,118 |
) |
Accrued payroll and
related benefits |
(946 |
) |
|
(1,021 |
) |
Deferred revenue |
(2,361 |
) |
|
382 |
|
Deferred rent |
(317 |
) |
|
(102 |
) |
Reserve for potential
uncertain income tax return positions |
30 |
|
|
518 |
|
Other liabilities |
(527 |
) |
|
268 |
|
Net cash provided by operating activities |
25,493 |
|
|
15,787 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Acquisition of
Transcorp |
(6,554 |
) |
|
— |
|
Cash received from Paul
Merchants for 10% stake in MTSS combined business |
4,996 |
|
|
— |
|
Capitalized software
development costs |
(622 |
) |
|
(514 |
) |
Maturities (Purchases)
of marketable securities |
5,198 |
|
|
(1,005 |
) |
Capital
expenditures |
(531 |
) |
|
(2,705 |
) |
Net cash provided by (used in) investing
activities |
2,487 |
|
|
(4,224 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
(Repayments of)
Proceeds from revolving line of credit, net |
(100,835 |
) |
|
40,000 |
|
Proceeds from term
loan |
124,250 |
|
|
— |
|
Principal payments of
term loan obligation |
— |
|
|
(3,125 |
) |
Repurchases of common
stock |
— |
|
|
(40,517 |
) |
Proceeds from the
exercise of stock options |
— |
|
|
52 |
|
Forfeiture of certain
shares to satisfy exercise costs and the recipients income tax
obligations related to stock options exercised and restricted stock
vested |
(36 |
) |
|
(167 |
) |
Dividend payments |
(2,369 |
) |
|
(2,428 |
) |
Cash Overdraft |
745 |
|
|
— |
|
Payments of capital
lease obligations |
— |
|
|
(1 |
) |
Net cash provided by (used in) financing
activities |
21,755 |
|
|
(6,186 |
) |
Effect of foreign
exchange rates on cash |
(1,723 |
) |
|
786 |
|
Net change in cash and cash equivalents |
48,012 |
|
|
6,163 |
|
Cash and
cash equivalents, and restricted cash at the beginning of the
period |
70,867 |
|
|
116,941 |
|
Cash and cash equivalents, and restricted cash at the end
of the period |
$ |
118,879 |
|
|
$ |
123,104 |
|
Supplemental
disclosures of cash flow information: |
|
|
|
Interest paid |
$ |
4,280 |
|
|
$ |
2,289 |
|
Income taxes paid |
$ |
6,751 |
|
|
$ |
6,663 |
|
|
|
|
|
|
|
|
|
CONTACT:
Darren Joseph
678 -281-2027 or IR@ebix.com
David Collins or Chris Eddy
Catalyst Global - 212-924-9800 or ebix@catalyst-ir.com
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