ExlService Holdings, Inc. (NASDAQ: EXLS), a leading operations
management and analytics company, today announced its financial
results for the quarter and full year ended December 31, 2019.
Rohit Kapoor, Vice Chairman and Chief Executive
Officer, said, “I am pleased with our performance in 2019. We grew
our Analytics business by 25.3% with a 13.5% growth in organic
revenue. Our operations management businesses grew nicely at 6.1%
year over year and in the second half of the year our growth
accelerated to more than 10%. This was driven by double-digit
growth in the Insurance and Healthcare verticals.
“Our success is a result of our ability to
deliver tangible business outcomes for our clients as their
strategic digital transformation partner. Our ability to combine
deep domain expertise, data, analytics and digital technologies to
orchestrate solutions for business problems has positioned us as a
market leader and a partner of choice. Our pipeline remains strong
and we look forward to the continued growth in 2020.”
Maurizio Nicolelli, Chief Financial Officer,
said, “We ended 2019 with strong momentum in our business and a
very healthy balance sheet. For 2019, we generated $168.4 million
in cash flow from operations and ended the year with $321.4 million
in cash and short-term investments while total borrowings were
$249.9 million, for a net cash position of $71.5 million. Our
initial 2020 guidance reflects our desire to drive shareholder
return through revenue growth in the mid-to-high single digits on a
constant currency basis and adjusted diluted EPS growth of 11% to
16%.”
______________________________________________________________
(1) Refer to Financial
Highlights for details.
Financial Highlights: Fourth Quarter
2019
We have six reportable segments: Insurance,
Healthcare, Travel, Transportation & Logistics, Finance &
Accounting, All Other (consisting of our Banking & Financial
Services, Utilities and Consulting operating segments) and
Analytics. Reconciliations of adjusted (non-GAAP) financial
measures to GAAP measures are included at the end of this
release.
- Revenues for the quarter ended December 31, 2019 increased to
$256.9 million compared to $234.9 million for the fourth quarter of
2018, an increase of 9.4% on a reported basis and 9.3% on a
constant currency basis from the fourth quarter of 2018, as well as
an increase of 2.2% sequentially on a reported basis and 2.0% on a
constant currency basis, from the third quarter of 2019.
|
|
Revenues |
|
Gross Margin |
|
|
Three months ended |
|
Three months ended |
|
|
Dec 31, |
|
Dec 31, |
|
Sept 30, |
|
Dec 31, |
|
Dec 31, |
|
Sept 30, |
Reportable Segments |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
|
(dollars in millions) |
|
|
|
|
|
|
Insurance |
|
$ |
75.2 |
|
|
$ |
65.1 |
|
|
$ |
77.7 |
|
|
31.4 |
% |
|
31.0 |
% |
|
33.7 |
% |
Healthcare |
|
26.0 |
|
|
21.4 |
|
|
24.0 |
|
|
21.6 |
% |
|
20.5 |
% |
|
19.1 |
% |
Travel, Transportation &
Logistics |
|
16.1 |
|
|
16.9 |
|
|
17.0 |
|
|
43.2 |
% |
|
40.6 |
% |
|
42.2 |
% |
Finance & Accounting |
|
27.9 |
|
|
25.2 |
|
|
26.5 |
|
|
41.2 |
% |
|
40.7 |
% |
|
37.3 |
% |
All Other |
|
18.0 |
|
|
20.4 |
|
|
17.4 |
|
|
35.1 |
% |
|
32.5 |
% |
|
29.1 |
% |
Analytics |
|
93.7 |
|
|
85.9 |
|
|
88.8 |
|
|
37.0 |
% |
|
36.8 |
% |
|
34.8 |
% |
Total revenues, net |
|
$ |
256.9 |
|
|
$ |
234.9 |
|
|
$ |
251.4 |
|
|
34.5 |
% |
|
34.0 |
% |
|
33.4 |
% |
- Operating income margin for the quarter ended December 31, 2019
was 9.1%, compared to an operating loss margin of 0.9% for the
fourth quarter of 2018 and operating income margin of 8.9% for the
third quarter of 2019. During the quarters ended December 31, 2019
and 2018 and September 30, 2019, we recorded impairment and
restructuring charges of $1.4 million, $20.1 million and $0.5
million, respectively, related to the wind down of the Health
Integrated business, which reduced our operating income margin by
approximately 50 basis points, 850 basis points and 20 basis
points, respectively. The wind down of the Health Integrated
business was substantially completed on December 31, 2019 and we do
not expect to incur impairment and restructuring charges in 2020.
Adjusted operating income margin for the quarter ended December 31,
2019 was 13.3% compared to 13.1% for the fourth quarter of 2018 and
14.3% for the third quarter of 2019.
- Diluted earnings per share for the quarter ended December 31,
2019 was $0.62 compared to $0.11 for the fourth quarter of 2018 and
$0.55 for the third quarter of 2019. During the quarters ended
December 31, 2019 and 2018 and September 30, 2019, we recorded
impairment and restructuring charges of $1.4 million ($1.0 million
net of tax), $20.1 million ($17.0 million net of tax) and $0.5
million ($0.4 million net of tax), respectively, related to the
wind down of the Health Integrated business, which reduced our
diluted earnings per share by $0.03, $0.49 and $0.01, respectively.
Adjusted diluted earnings per share for the quarter ended December
31, 2019 was $0.79 compared to $0.74 for the fourth quarter of 2018
and $0.84 for the third quarter of 2019.
Financial Highlights: Full Year
2019
- Revenues for the year ended December 31, 2019 increased to
$991.3 million compared to $883.1 million for the year ended
December 31, 2018, an increase of 12.3% on a reported basis and
13.0% on a constant currency basis.
|
|
Revenues |
|
Gross Margin |
|
|
Year ended |
|
Year ended |
Reportable Segments |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
|
(dollars in millions) |
|
|
|
|
Insurance |
|
$ |
294.2 |
|
|
$ |
258.1 |
|
|
32.1 |
% |
|
32.2 |
% |
Healthcare |
|
90.6 |
|
|
84.4 |
|
|
18.7 |
% |
|
20.9 |
% |
Travel, Transportation &
Logistics |
|
68.0 |
|
|
70.2 |
|
|
43.0 |
% |
|
41.5 |
% |
Finance & Accounting |
|
106.6 |
|
|
97.9 |
|
|
40.6 |
% |
|
39.6 |
% |
All Other |
|
74.6 |
|
|
87.2 |
|
|
34.6 |
% |
|
33.0 |
% |
Analytics |
|
357.3 |
|
|
285.3 |
|
|
35.3 |
% |
|
35.3 |
% |
Total revenues, net |
|
$ |
991.3 |
|
|
$ |
883.1 |
|
|
33.9 |
% |
|
33.8 |
% |
- Operating income margin for the year ended December 31, 2019
was 7.7% compared to 5.6% for the year ended December 31, 2018.
During the year 2019 and 2018, we recorded impairment and
restructuring charges of $8.7 million and $20.1 million,
respectively, related to the wind down of the Health Integrated
business, which reduced our operating income margin by
approximately 90 basis points and 230 basis points, respectively.
The wind down of the Health Integrated business was substantially
completed on December 31, 2019 and we do not expect to incur
impairment and restructuring charges in 2020. Adjusted operating
income margin for the year ended December 31, 2019 was 13.4%
compared to 13.5% for the year ended December 31, 2018.
- Diluted earnings per share for the year ended December 31, 2019
was $1.95 compared to $1.62 for the year ended December 31, 2018.
During the year 2019 and 2018, we recorded impairment and
restructuring charges of $8.7 million ($6.5 million net of
tax) and $20.1 million ($17.0 million net of tax),
respectively, related to the wind down of the Health Integrated
business, which reduced our diluted earnings per share by $0.19 and
$0.49 for the year ended December 31, 2019 and 2018, respectively.
Adjusted diluted earnings per share for the year ended December 31,
2019 was $3.09 compared to $2.77 for the year ended December 31,
2018.
Business Highlights: Fourth Quarter
2019
- Won five new clients in the fourth quarter of 2019, including
two in our operations management businesses and three in Analytics.
For the full year, we won 28 new clients, 14 in operations
management and 14 in Analytics.
- Recognized as a Leader in the IDC MarketScape: Worldwide
Analytics for Business Operations Services 2019 Vendor
Assessment
- Positioned as a Leader in the Everest Group Advanced Analytics
& Insights Services PEAK Matrix™ Assessment 2020
- Recognized as a Leader in the ISG Provider Lens for Insurance
BPO Digital Services – U.S. 2019 for Property & Casualty
Insurance Services, Life & Annuity Digital Services and Life
& Annuity TPA Services
Post-Fourth Quarter
Highlights
- Appointed Maurizio Nicolelli to the role of Executive Vice
President, Chief Financial Officer and member of the Executive
Committee
- Appointed Vivek Jetley to the role of Executive Vice President,
Head of Analytics and member of the Executive Committee
2020 Guidance
Based on current visibility, and a U.S. Dollar
to Indian Rupee exchange rate of 71.5, British Pound to U.S. Dollar
exchange rate of 1.29, U.S. Dollar to the Philippine Peso exchange
rate of 51.0 and all other currencies at current exchange rates, we
are providing the following guidance:
- Revenue of $1.040 billion to $1.065 billion, representing an
annual revenue growth rate of 5% to 8% on a constant currency
basis.
- Adjusted diluted earnings per share of $3.42 to $3.58.
2020 Change in Segment
ReportingEffective January 1, 2020, we made certain
operational and structural changes to more closely integrate our
businesses and to simplify our organizational structure. We now
manage and report financial information through our four strategic
business units: Insurance, Healthcare, Analytics and Emerging
Business, which reflects how management will review financial
information and make operating decisions. These business units will
develop client-specific solutions, build capabilities, maintain a
unified go-to-market approach and be integrally responsible for
service delivery, customer satisfaction, growth and profitability.
In line with our strategy of vertical integration and focus on
domain expertise, we have integrated our Finance & Accounting
and Consulting operating segments within each of the Insurance and
Healthcare operating segments based on the respective
industry-specific clients. Finance & Accounting and Consulting
Services to clients outside of those industries, will now be part
of our newly formed business unit and reportable segment “Emerging
Business”. In addition, we integrated our former Travel,
Transportation and Logistics, Banking and Financial Services, and
Utilities operating segments under “Emerging Business” to further
leverage and optimize the operating scale in providing operations
management services. Information presented in this release reflects
the operating and reporting structure in place for 2019.
Conference Call
ExlService Holdings, Inc. will host a conference
call on Thursday, February 27, 2020 at 8:00 A.M. ET to discuss the
Company’s quarterly operating and financial results. The conference
call will be available live via the internet by accessing the
investor relations section of EXL’s website at ir.exlservice.com,
where an accompanying investor-friendly spreadsheet of historical
operating and financial data can also be accessed. Please access
the website at least fifteen minutes prior to the call to register,
download and install any necessary audio software.
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 twelve months.
About ExlService Holdings,
Inc.
EXL (NASDAQ: EXLS) is a leading operations
management and analytics company that helps our clients build and
grow sustainable businesses. By orchestrating our domain expertise,
data, analytics and digital technology, we look deeper to design
and manage agile, customer-centric operating models to improve
global operations, drive profitability, enhance customer
satisfaction, increase data-driven insights, and manage risk and
compliance. Headquartered in New York, EXL has more than 31,700
professionals in locations throughout the United States, the UK,
Europe, India, the Philippines, Colombia, Australia and South
Africa. EXL serves multiple industries including insurance,
healthcare, banking and financial services, utilities, travel,
transportation and logistics, media and retail, among others. For
more information, visit www.exlservice.com.
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, which
include our ability to successfully close and integrate strategic
acquisitions, are discussed in more detail in EXL’s filings with
the Securities and Exchange Commission, including EXL’s Annual
Report on Form 10-K. These risks could cause actual results to
differ materially from those implied by forward-looking statements
in this release. You should keep in mind that any forward-looking
statement made herein, or elsewhere, speaks only as of the date on
which it is made. New risks and uncertainties come up from time to
time, and it is impossible to predict these events or how they may
affect EXL. EXL has no obligation to update any forward-looking
statements after the date hereof, except as required by federal
securities laws.
EXLSERVICE HOLDINGS,
INC.CONSOLIDATED STATEMENTS OF
INCOME(In thousands, except share and per share
amounts)
|
|
|
(Unaudited) |
|
Year ended December 31, |
|
Three months ended December 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues, net |
$ |
991,346 |
|
|
$ |
883,112 |
|
|
$ |
256,872 |
|
|
$ |
234,903 |
|
Cost of revenues(1) |
655,490 |
|
|
584,855 |
|
|
168,262 |
|
|
154,948 |
|
Gross
profit(1) |
335,856 |
|
|
298,257 |
|
|
88,610 |
|
|
79,955 |
|
Operating expenses: |
|
|
|
|
|
|
|
General and administrative expenses |
126,909 |
|
|
116,202 |
|
|
33,560 |
|
|
30,592 |
|
Selling and marketing expenses |
71,842 |
|
|
63,612 |
|
|
17,846 |
|
|
18,019 |
|
Depreciation and amortization expense |
51,981 |
|
|
48,566 |
|
|
12,515 |
|
|
13,381 |
|
Impairment and restructuring charges |
8,671 |
|
|
20,056 |
|
|
1,375 |
|
|
20,056 |
|
Total operating expenses |
259,403 |
|
|
248,436 |
|
|
65,296 |
|
|
82,048 |
|
Income/(loss) from
operations |
76,453 |
|
|
49,821 |
|
|
23,314 |
|
|
(2,093 |
) |
Foreign exchange gain, net |
3,752 |
|
|
4,787 |
|
|
281 |
|
|
1,373 |
|
Interest expense |
(13,612 |
) |
|
(7,227 |
) |
|
(2,986 |
) |
|
(3,508 |
) |
Other income, net |
16,507 |
|
|
12,989 |
|
|
3,419 |
|
|
4,757 |
|
Income before income tax
expense and earnings from equity affiliates |
83,100 |
|
|
60,370 |
|
|
24,028 |
|
|
529 |
|
Income tax expense/(benefit) |
15,172 |
|
|
3,397 |
|
|
2,601 |
|
|
(3,399 |
) |
Income before earnings
from equity affiliates |
67,928 |
|
|
56,973 |
|
|
21,427 |
|
|
3,928 |
|
Loss from equity-method
investment |
269 |
|
|
247 |
|
|
71 |
|
|
71 |
|
Net income attributable
to ExlService Holdings, Inc. stockholders |
$ |
67,659 |
|
|
$ |
56,726 |
|
|
$ |
21,356 |
|
|
$ |
3,857 |
|
Earnings per share attributable
to ExlService Holdings, Inc. stockholders: |
|
|
|
|
|
|
|
Basic |
$ |
1.97 |
|
|
$ |
1.65 |
|
|
$ |
0.62 |
|
|
$ |
0.11 |
|
Diluted |
$ |
1.95 |
|
|
$ |
1.62 |
|
|
$ |
0.62 |
|
|
$ |
0.11 |
|
Weighted-average number of shares
used in computing earnings per share attributable to ExlService
Holdings Inc. stockholders: |
|
|
|
|
|
|
|
Basic |
34,350,150 |
|
|
34,451,008 |
|
|
34,253,308 |
|
|
34,388,025 |
|
Diluted |
34,732,683 |
|
|
35,030,984 |
|
|
34,696,896 |
|
|
34,921,388 |
|
(1) Exclusive of depreciation and
amortization.
EXLSERVICE HOLDINGS,
INC.CONSOLIDATED BALANCE
SHEETS(In thousands, except share and per share
amounts)
|
As of |
|
December 31, 2019 |
|
December 31, 2018 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
119,165 |
|
|
$ |
95,881 |
|
Short-term investments |
202,238 |
|
|
184,489 |
|
Restricted cash |
5,453 |
|
|
5,608 |
|
Accounts receivable, net |
171,864 |
|
|
164,752 |
|
Prepaid expenses |
13,246 |
|
|
11,326 |
|
Advance income tax, net |
4,698 |
|
|
9,639 |
|
Other current assets |
24,594 |
|
|
28,240 |
|
Total current
assets |
541,258 |
|
|
499,935 |
|
Property and equipment, net |
79,142 |
|
|
73,510 |
|
Operating lease right-of-use
assets |
86,396 |
|
|
— |
|
Restricted cash |
2,426 |
|
|
2,642 |
|
Deferred tax assets, net |
11,855 |
|
|
6,602 |
|
Intangible assets, net |
73,982 |
|
|
95,495 |
|
Goodwill |
349,529 |
|
|
349,984 |
|
Other assets |
36,016 |
|
|
31,015 |
|
Investment in equity
affiliate |
2,484 |
|
|
2,753 |
|
Total
assets |
$ |
1,183,088 |
|
|
$ |
1,061,936 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
6,564 |
|
|
$ |
5,653 |
|
Current portion of long-term borrowings |
40,867 |
|
|
21,423 |
|
Deferred revenue |
13,436 |
|
|
7,722 |
|
Accrued employee costs |
71,626 |
|
|
54,893 |
|
Accrued expenses and other current liabilities |
71,023 |
|
|
64,169 |
|
Current portion of operating lease liabilities |
24,148 |
|
|
— |
|
Income taxes payable, net |
1,432 |
|
|
1,012 |
|
Current portion of finance lease liabilities |
253 |
|
|
223 |
|
Total current
liabilities |
229,349 |
|
|
155,095 |
|
Long-term borrowings, less
current portion |
194,131 |
|
|
263,241 |
|
Finance lease liabilities, less
current portion |
430 |
|
|
315 |
|
Income taxes payable |
1,790 |
|
|
— |
|
Deferred tax liabilities,
net |
966 |
|
|
8,445 |
|
Operating lease liabilities, less
current portion |
74,709 |
|
|
— |
|
Other non-current
liabilities |
11,712 |
|
|
16,521 |
|
Total
liabilities |
513,087 |
|
|
443,617 |
|
Commitments and
contingencies |
|
|
|
Preferred stock, $0.001 par
value; 15,000,000 shares authorized, none issued |
— |
|
|
— |
|
ExlService Holdings, Inc. Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value; 100,000,000 shares authorized,
38,480,654 shares issued and 34,185,241 shares outstanding as of
December 31, 2019 and 37,850,544 shares issued and 34,222,476
shares outstanding as of December 31, 2018 |
39 |
|
|
38 |
|
Additional paid-in capital |
391,240 |
|
|
364,179 |
|
Retained earnings |
551,903 |
|
|
484,244 |
|
Accumulated other comprehensive loss |
(84,892 |
) |
|
(83,467 |
) |
Total including shares
held in treasury |
858,290 |
|
|
764,994 |
|
Less: 4,295,413 shares as of
December 31, 2019 and 3,628,068 shares as of December 31, 2018,
held in treasury, at cost |
(188,289 |
) |
|
(146,925 |
) |
Stockholders'
equity |
$ |
670,001 |
|
|
$ |
618,069 |
|
Non-controlling interest |
— |
|
|
250 |
|
Total
equity |
$ |
670,001 |
|
|
$ |
618,319 |
|
Total liabilities and
stockholders’ equity |
$ |
1,183,088 |
|
|
$ |
1,061,936 |
|
EXLSERVICE HOLDINGS, INC.
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 certain financial measures
that are considered non-GAAP financial measures, including the
following:
(i) Adjusted
operating income and adjusted operating income margin;
(ii) Adjusted EBITDA
and adjusted EBITDA margin;
(iii) Adjusted net
income and adjusted diluted earnings per share; and
(iv) Revenue growth
on a constant currency basis.
These non-GAAP financial measures are not based
on any comprehensive set of accounting rules or principles, should
not be considered a substitute for, or superior to, financial
measures calculated in accordance with GAAP, and may be different
from non-GAAP financial measures used by other companies.
Accordingly, the financial results calculated in accordance with
GAAP and reconciliations from those financial statements should be
carefully evaluated. EXL believes that providing these non-GAAP
financial measures may help investors better understand EXL’s
underlying financial performance. Management also believes that
these non-GAAP financial measures, when read in conjunction with
EXL’s reported results, can provide useful supplemental information
for investors analyzing period-to-period comparisons of the
Company’s results and comparisons of the Company’s results with the
results of other companies. Additionally, management considers some
of these non-GAAP financial measures to determine variable
compensation of its employees. The Company believes that it is
unreasonably difficult to provide its earnings per share financial
guidance in accordance with GAAP for a number of reasons,
including, without limitation, the Company’s inability to predict
its future stock-based compensation expense under ASC Topic 718,
the amortization of intangibles associated with further
acquisitions and the currency fluctuations and associated tax
impacts. As such, the Company presents guidance with respect to
adjusted diluted earnings per share. The Company also incurs
significant non-cash charges for depreciation that may not be
indicative of the Company’s ability to generate cash flow.
EXL non-GAAP financial measures exclude, where
applicable, stock-based compensation expense, amortization of
acquisition-related intangible assets, impairment charges of
acquired long-lived and intangible assets including goodwill,
provision for litigation settlement, non-cash interest expense on
convertible senior notes, restructuring charges and other
acquisition-related expenses or benefits. Acquisition-related
expenses or benefits include, changes in the fair value of earn-out
consideration liabilities, external deal costs, integration
expenses, direct and incremental travel costs and non-recurring
benefits. In addition to excluding the above items, our adjusted
net income and adjusted diluted EPS also excludes the effect of
incremental income tax expense related to the U.S. Tax Cuts and
Jobs Act of 2017 (the “Tax Reform Act”), non-recurring other tax
adjustments and income tax impact of the above pre-tax items, as
applicable. The income tax impact of each item is calculated by
applying the statutory rate and local tax regulations in the
jurisdiction in which the item was incurred.
A limitation of using non-GAAP financial
measures versus financial measures calculated in accordance with
GAAP is that non-GAAP financial measures do not reflect all of the
amounts associated with our operating results as determined in
accordance with GAAP and exclude costs that are recurring, namely
stock-based compensation and amortization of acquisition-related
intangible assets. EXL compensates for these limitations by
providing specific information regarding the GAAP amounts excluded
from non-GAAP financial measures to allow investors to evaluate
such non-GAAP financial measures.
The information provided on a constant currency
basis reflects a comparison of current period results translated at
the prior period currency rates. This information is provided
because EXL believes that it provides useful comparative
incremental information to investors regarding EXL’s true operating
performance. EXL’s primary exchange rate exposure is with the
Indian Rupee, the U.K. pound sterling and the Philippine Peso. The
average exchange rate of the U.S. Dollar against the Indian Rupee
increased from 71.10 during the quarter ended December 31, 2018 to
71.35 during the quarter ended December 31, 2019, representing a
depreciation of 0.3%. The average exchange rate of the U.S. Dollar
against the Philippine Peso decreased from 52.86 during the quarter
ended December 31, 2018 to 50.73 during the quarter ended December
31, 2019, representing an appreciation of 4.0%. The average
exchange rate of the British Pound against the U.S. Dollar
increased from 1.28 during the quarter ended December 31, 2018 to
1.30 during the quarter ended December 31, 2019, representing an
appreciation of 1.8%.
The following table shows the reconciliation of
these non-GAAP financial measures for the year ended December 31,
2019 and December 31, 2018, the three months ended December 31,
2019 and 2018 and the three months ended September 30, 2019:
Reconciliation of Adjusted Operating
Income and Adjusted EBITDA(Amounts in thousands)
|
|
Year ended |
|
Three months ended |
|
|
December 31, |
|
December 31, |
|
September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
Net
income (GAAP) |
|
$ |
67,659 |
|
|
$ |
56,726 |
|
|
$ |
21,356 |
|
|
$ |
3,857 |
|
|
$ |
19,044 |
|
add: Income tax expense/(benefit) |
|
15,172 |
|
|
3,397 |
|
|
2,601 |
|
|
(3,399 |
) |
|
5,701 |
|
subtract: Interest expense, foreign exchange gain, net, loss from
equity-method investment and other income, net |
|
(6,378 |
) |
|
(10,302 |
) |
|
(643 |
) |
|
(2,551 |
) |
|
(2,323 |
) |
Income/(loss) from operations (GAAP) |
|
$ |
76,453 |
|
|
$ |
49,821 |
|
|
$ |
23,314 |
|
|
$ |
(2,093 |
) |
|
$ |
22,422 |
|
add: Stock-based compensation expense |
|
26,070 |
|
|
23,901 |
|
|
4,532 |
|
|
6,590 |
|
|
7,427 |
|
add: Amortization of acquisition-related intangibles |
|
21,558 |
|
|
20,377 |
|
|
4,974 |
|
|
5,951 |
|
|
5,502 |
|
add: Impairment and restructuring charges (a) |
|
8,671 |
|
|
20,056 |
|
|
1,375 |
|
|
20,056 |
|
|
489 |
|
add: Provision for litigation settlement (b) |
|
— |
|
|
2,400 |
|
|
— |
|
|
— |
|
|
— |
|
add: Acquisition-related expenses (c) |
|
— |
|
|
2,295 |
|
|
— |
|
|
236 |
|
|
— |
|
Adjusted operating income (Non-GAAP) |
|
$ |
132,752 |
|
|
$ |
118,850 |
|
|
$ |
34,195 |
|
|
$ |
30,740 |
|
|
$ |
35,840 |
|
Adjusted operating income margin as a % of Revenues
(Non-GAAP) |
|
13.4 |
% |
|
13.5 |
% |
|
13.3 |
% |
|
13.1 |
% |
|
14.3 |
% |
add: Depreciation |
|
30,423 |
|
|
28,189 |
|
|
7,541 |
|
|
7,430 |
|
|
7,545 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
163,175 |
|
|
$ |
147,039 |
|
|
$ |
41,736 |
|
|
$ |
38,170 |
|
|
$ |
43,385 |
|
Adjusted EBITDA margin as a % of revenue (Non-GAAP) |
|
16.5 |
% |
|
16.7 |
% |
|
16.2 |
% |
|
16.2 |
% |
|
17.3 |
% |
(a) To exclude
impairment and restructuring charges related to wind down of the
Health Integrated business. (b) To exclude provision for litigation
settlement recorded during the three months ended March 31, 2018.
(c) To exclude acquisition-related expenses. |
Reconciliation of Adjusted Net Income and
Adjusted Diluted Earnings Per Share(Amounts in thousands,
except per share data)
|
|
Year ended |
|
Three months ended |
|
|
December 31, |
|
December 31, |
|
September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
Net
income (GAAP) |
|
$ |
67,659 |
|
|
$ |
56,726 |
|
|
$ |
21,356 |
|
|
$ |
3,857 |
|
|
$ |
19,044 |
|
add: Stock-based compensation expense |
|
26,070 |
|
|
23,901 |
|
|
4,532 |
|
|
6,590 |
|
|
7,427 |
|
add: Amortization of acquisition-related intangibles |
|
21,558 |
|
|
20,377 |
|
|
4,974 |
|
|
5,951 |
|
|
5,502 |
|
add: Impairment and restructuring charges (a) |
|
8,671 |
|
|
20,056 |
|
|
1,375 |
|
|
20,056 |
|
|
489 |
|
add: Provision for litigation settlement (b) |
|
— |
|
|
2,400 |
|
|
— |
|
|
— |
|
|
— |
|
add: Acquisition-related (benefits)/expenses (c) |
|
(761 |
) |
|
1,045 |
|
|
— |
|
|
(1,014 |
) |
|
(761 |
) |
add: Non-cash interest expense related to convertible senior
notes (d) |
|
2,472 |
|
|
600 |
|
|
636 |
|
|
600 |
|
|
618 |
|
subtract: Effect of Tax Reform Act and other non-recurring tax
expenses/(benefits) (e) |
|
(3,134 |
) |
|
(7,810 |
) |
|
(1,663 |
) |
|
(2,974 |
) |
|
— |
|
subtract: Tax impact on stock-based compensation expense
(f) |
|
(7,986 |
) |
|
(12,101 |
) |
|
(2,144 |
) |
|
(2,837 |
) |
|
(1,790 |
) |
subtract: Tax impact on amortization of acquisition-related
intangibles |
|
(4,621 |
) |
|
(4,351 |
) |
|
(1,042 |
) |
|
(1,511 |
) |
|
(1,188 |
) |
subtract: Tax impact on impairment and restructuring
charges |
|
(2,140 |
) |
|
(3,072 |
) |
|
(352 |
) |
|
(3,072 |
) |
|
(120 |
) |
subtract: Tax impact on provision for litigation
settlement |
|
— |
|
|
(612 |
) |
|
— |
|
|
— |
|
|
— |
|
subtract: Tax impact on acquisition-related
expenses/(benefits) |
|
186 |
|
|
(15 |
) |
|
— |
|
|
253 |
|
|
186 |
|
subtract: Tax impact on non-cash interest expense related to
convertible senior notes |
|
(606 |
) |
|
(150 |
) |
|
(159 |
) |
|
(150 |
) |
|
(150 |
) |
Adjusted net income (Non-GAAP) |
|
$ |
107,368 |
|
|
$ |
96,994 |
|
|
$ |
27,513 |
|
|
$ |
25,749 |
|
|
$ |
29,257 |
|
Adjusted diluted earnings per share
(Non-GAAP) |
|
$ |
3.09 |
|
|
$ |
2.77 |
|
|
$ |
0.79 |
|
|
$ |
0.74 |
|
|
$ |
0.84 |
|
(a) To exclude impairment and restructuring
charges related to wind down of the Health Integrated business.
(b) To exclude provision for litigation
settlement recorded during the three months ended March 31,
2018.
(c) To exclude acquisition related expenses and
one-time benefits.
(d) To exclude non-cash interest expense related to convertible
senior notes.
(e) In 2019, the Company recorded non-recurring
tax benefits of $1,663 and $3,134 during the three months ended and
year ended December 31, 2019, respectively, related to certain
deferred tax assets and liabilities. In 2018, the Company finalized
its transition tax expense under the Tax Reform Act and recorded
tax expense of $5,012 and $176 during the three months ended and
year ended December 31, 2018, respectively. The Company also
recorded non-recurring tax benefits of $6,274 with respect to its
unused 2018 foreign branch income tax credits under IRC regulations
issued in December 2018 and certain deferred tax assets of $1,712
during the three months ended and year ended December 31, 2018.
(f) Tax impact includes $2,306 and $7,227 for
the year ended December 31, 2019 and 2018 respectively, $1,211 and
$1,789 during the three months ended December 31, 2019 and 2018
respectively, and $21 during the three months ended September 30,
2019 related to discrete benefit recognized in income tax expense
on adoption of ASU No. 2016-09, Compensation - Stock
Compensation.
Contact: Steven N. BarlowVice President, Investor Relations(212)
624-5913ir@exlservice.com
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