WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global business process outsourcing (BPO) services, today announced
results for the 2013 fiscal fourth quarter and full year ended
March 31, 2013.
Highlights – Fiscal Fourth Quarter
2013:
GAAP
Financials
• Revenue of $119.2 million, up 5.2%
from $113.3 million in Q4 of last year and down 0.8% from $120.2
million last quarter
• Profit of $8.2 million, compared to
$4.4 million in Q4 of last year and $6.1 million last
quarter
• Diluted earnings per ADS of $0.16,
compared to $0.09 in Q4 of last year and $0.12 last quarter
Non-GAAP
Financial Measures*
• Revenue less repair payments of
$112.8 million, up 13.0% from $99.8 million in Q4 of last year and
down 0.7% from $113.5 million last quarter
• Adjusted Net Income (ANI) of $15.8
million, compared to $13.2 million in Q4 of last year and $14.0
million last quarter
• Adjusted diluted earnings per ADS of
$0.30, compared to $0.27 in Q4 of last year and $0.27 last
quarter
Operations
Update
• Added 7 new clients in the quarter,
expanded 5 existing relationships
• Days sales outstanding (DSO) at 33
days
• Global headcount of 25,520 as of
March 31, 2013
Highlights – Fiscal Full Year
2013:
GAAP
Financials
• Revenue of $460.3 million, down 2.9%
from $474.1 million in fiscal 2012 (primarily due to change in
contract terms for repair payments)
• Profit of $21.4 million, compared to
$12.5 million in fiscal 2012
• Diluted earnings per ADS of $0.41,
compared to $0.27 in fiscal 2012
Non-GAAP
Financial Measures*
• Revenue less repair payments of
$436.1 million, up 10.4% from $395.1 million in fiscal 2012
• Adjusted Net Income (ANI) of $53.1
million, compared to $47.3 million in fiscal 2012
• Adjusted diluted earnings per ADS of
$1.03, compared to $1.02 in fiscal 2012
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 less repair payments* of $112.8 million in the fiscal
fourth quarter increased 13.0% year-over-year, and was down 0.7%
compared to the previous quarter. Year-over-year, revenue
improvement was broad-based, with particular strength in emerging
verticals such as Utilities and Retail & CPG, as well
traditional verticals including Banking & Financial Services
and Insurance. The sequential revenue reduction was the result of
depreciation in the British Pound against the US dollar, and
approximately $2 million of incremental transition revenue booked
in the third quarter. In Q4, the average GBP/$ exchange rate
depreciated 0.9% versus the same quarter of last year, and 3.3%
sequentially, adversely impacting 49.7% of the company’s revenue.
Excluding exchange rate impacts, constant currency revenue* grew
13.4% versus the same quarter of last year and 1.0%
sequentially.
Adjusted operating margin* for the quarter was 15.8%, as
compared to 17.5% in Q4 of last year, and 13.9% reported in the
third quarter. On a year-over-year basis, operating margin declined
as a result of investments in infrastructure and the Capability
Creation Group, and our acquisition of Fusion Outsourcing. Also, as
clients have increasingly adopted our new onshore and nearshore
capabilities, the company’s delivery mix has shifted putting
pressure on operating margins. Depreciation in the Indian rupee and
higher revenue levels helped to significantly offset these impacts.
The 195 basis point sequential improvement in adjusted operating
margin* was the result of higher constant currency revenue volumes,
gains on our Q4 hedging positions and the reduction in pass-through
transition revenue. These items more than offset the negative
impacts on revenue and operating margin associated with
depreciation in the British Pound.
Adjusted net income (ANI)* in the fiscal fourth quarter was
$15.8 million, up $2.6 million as compared to Q4 of last year and
up $1.8 million from the previous quarter. The fiscal fourth
quarter ANI* margin was 14.0%, as compared to 13.2% in Q4 of last
year, and 12.3% reported last quarter. On a year-over-year basis,
increased income on higher cash balances and a lower effective tax
rate more than offset the reduction in adjusted operating margin*
percentage discussed above. Sequentially, the increase in ANI*
margin was a result of a higher adjusted operating margin*, which
was partially offset by a higher effective tax rate in Q4.
From a balance sheet perspective, WNS ended the fiscal fourth
quarter with $117.6 million in cash and investments and $96.4
million of gross debt. In the fiscal fourth quarter, the company
generated $17.8 million in cash from operations, and capital
expenditures for the quarter came in at $3.4 million. Days sales
outstanding were 33 days, representing a reduction from 35 days in
Q4 of last year, and an increase from 32 days last quarter.
“While currency headwinds muted our reported Q4 revenues, we
continued to make progress adding new clients and strengthening our
existing relationships during the quarter. Both financially and
operationally, fiscal 2013 represented a solid step forward for
WNS. Our revenue less repair payments* grew 10.4%, which
represented 11.2% improvement on a constant currency* basis. This
is compared to 6.9% growth, or 5.3% constant currency* growth
posted in fiscal 2012. Revenue growth in 2013 also included
approximately $10.0 million, or 2.6% from the acquisition of
Fusion, South Africa. In addition to driving revenue improvement
during the year, the company was able to invest in geographic
expansion, technology-enablement, domain expertise and the creation
of new services while growing our adjusted net income* faster than
revenue less repair payments*,” said Keshav Murugesh, WNS’s Chief
Executive Officer.
“As we enter fiscal 2014, the demand environment for BPO is
stable and healthy and we are excited about our differentiated
positioning and the opportunity to accelerate business momentum.
While ongoing investments will be required to capitalize on the
long-term BPO growth trends, WNS believes that by successfully
executing on our key strategies we will be able to grow revenue at
or above industry rates and expand our margins.”
Fiscal 2014 GuidanceWNS has
provided guidance for the fiscal year ending March 31, 2014 as
follows:
- Revenue less repair payments* is
expected to be between $460 million and $480 million, up from
$436.1 million in fiscal 2013. This assumes an average GBP to USD
exchange rate of 1.52 versus 1.58 in fiscal 2013.
- ANI* is expected to range between $59
million and $63 million, up from $53.1 million in fiscal 2013. This
assumes an average USD to INR exchange rate of 54.4, the same
average exchange rate as fiscal 2013.
“Consistent with previous years, our initial guidance for fiscal
2014 is based on current visibility levels and exchange rates.
Guidance for the year reflects top line growth of 6% to 10%, with
90% visibility to the midpoint of the range. This guidance
represents 8% to 12% revenue growth on a constant currency* basis.
Our ANI* guidance reflects 11% to 19% year-over-year improvement.
WNS will continue to focus on making strategic investments and
driving operational excellence which will enable us to grow revenue
and improve profit margin in fiscal 2014 and beyond,” said Deepak
Sogani, WNS’s Chief Financial Officer.
Conference CallWNS will host
a conference call on April 17, 2013 at 8:00 am (Eastern) to discuss
the company's quarterly results. To participate in the call, please
use the following details: +1-866-277-1184; international dial-in
+1-617-597-5360; participant passcode 37185223. A replay will be
available for one week following the call at +1-888-286-8010;
international dial-in +1-617-801-6888; passcode 99626595, as well
as on the WNS website, www.wns.com, beginning two hours after the
end of the call.
About WNSWNS (Holdings)
Limited (NYSE: WNS), is a leading global business process
outsourcing 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 and Healthcare and
Utilities. WNS delivers an entire spectrum of business process
outsourcing services such as finance and accounting, customer care,
technology solutions, research and analytics and industry specific
back office and front office processes. As of March 31, 2013, WNS
had 25,520 professionals across 31 delivery centers worldwide
including 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 StatementThis
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 2014
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 Fusion’s
volume of business; our ability to successfully integrate Fusion’s
business operations with ours; our ability to successfully leverage
Fusion’s assets to grow our revenue, expand our service offerings
and market share and achieve accretive benefits from our
acquisition of Fusion; worldwide economic and business conditions;
political or economic instability in the jurisdictions where we
have operations; regulatory, legislative and judicial developments;
our ability to attract and retain clients; technological
innovation; telecommunications or technology disruptions; future
regulatory actions and conditions in our operating areas; our
dependence on a limited number of clients in a limited number of
industries; our ability to expand our business or effectively
manage growth; our ability to hire and retain enough sufficiently
trained employees to support our operations; negative public
reaction in the US or the UK to offshore outsourcing; the effects
of our different pricing strategies or those of our competitors;
and increasing competition in the BPO industry. These and other
factors are more fully discussed in our most recent annual report
on Form 20-F and subsequent reports on Form 6-K filed with or
furnished to the US Securities and Exchange Commission (SEC) which
are 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 refers 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
MeasuresThe 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 will be
contained in “Part I –Item 5. Operating and Financial Review and
Prospects” accompanying our fiscal 2013 financial statements to be
submitted to the SEC under our annual report on Form 20-F.
For financial statement reporting purposes, WNS has two
reportable segments: WNS Global BPO and WNS Auto Claims BPO.
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 (1) for “fault” repair cases where WNS
acts as the principal in its dealings with the third party repair
centers and its clients and (2) for “non-fault” repair cases with
respect to one client to whom WNS provides services similar to its
“fault” repair cases. WNS believes that revenue less repair
payments for “fault” repairs reflects more accurately the value
addition of the business process outsourcing 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 April 26, 2012.
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 calculated, for
the indicated periods, by restating the prior period’s revenue less
repair payments denominated in pound sterling or Euro, as
applicable, using the foreign exchange rate used for the latest
period.
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 Year
ended
March 31,2013
March 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
Revenue $ 119.2 $ 113.3 $ 120.2 $ 460.3 $
474.1 Cost of revenue 81.4 78.2
80.8 311.0 340.9
Gross profit 37.8 35.1 39.3 149.3 133.2 Operating expenses: Selling
and marketing expenses 7.8 6.3 7.8 30.2 26.3 General and
administrative expenses 14.2 13.0 15.1 57.1 51.3 Foreign exchange
(gain)/ loss, net (1.1 ) 0.2 2.1 5.5 (1.9 ) Amortization of
intangible assets 6.7 7.1 6.6
26.4 29.5
Operating profit 10.2 8.7 7.8 30.1 28.0 Other (income)/expense, net
(1.6 ) 0.2 (1.3 ) (4.8 ) (0.0 ) Finance expense 0.9
0.9 0.9 3.6
4.0 Profit before income taxes 10.9 7.5 8.2 31.3 24.0
Provision for income taxes 2.8 3.1
2.2 9.9
11.5 Profit $ 8.2 $ 4.4 $ 6.1
$ 21.4 $ 12.5 Earnings per share of
ordinary share Basic $ 0.16 $ 0.09 $ 0.12
$ 0.43 $ 0.28 Diluted $ 0.16
$ 0.09 $ 0.12 $ 0.41
$ 0.27
Growth of revenue (GAAP) and revenue
less repair payments (non-GAAP)
Three months ended Year ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
(Amounts in millions)
(Amounts in millions)
Revenue (GAAP) $ 119.2 $ 113.3 $ 120.2
$ 460.3 $ 474.1 Less: Payments to repair centers 6.5
13.5 6.7 24.1 79.1 Revenue less repair payments (Non-GAAP) 112.8
99.8 113.5 436.1 395.1 Constant currency revenue less
repair payments (Non-GAAP)
$ 112.8 $ 99.4 $ 111.7 $ 436.1 $ 392.1
Reconciliation of cost of revenue (GAAP
to non-GAAP)
Three months ended Year ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
(Amounts in millions)
(Amounts in millions)
Cost of revenue (GAAP) $ 81.4 $ 78.2 $ 80.8
$ 311.0 340.9 Less: Payments to repair centers 6.5
13.5 6.7 24.1 79.1 Less: Share-based compensation expense 0.3 0.3
0.0 1.0 1.0
Adjusted cost of revenue (excluding
payment to repair centers and share-based compensation expense)
(Non-GAAP)
$ 74.7 $ 64.4 $ 74.2 $ 285.9 260.9
Reconciliation of gross profit (GAAP to
non-GAAP)
Three months ended Year
ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
(Amounts in millions)
(Amounts in millions) Gross profit (GAAP) $ 37.8
$ 35.1 $ 39.3
$ 149.3 $ 133.2 Add: Share-based compensation
expense 0.3 0.3 0.0 1.0 1.0 Adjusted gross profit (excluding
share-based compensation expense)
(Non-GAAP)
$ 38.1 $ 35.4 $ 39.4 $ 150.2 $ 134.2
Reconciliation of selling and marketing
expenses (GAAP to non-GAAP)
Three months ended Year ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
(Amounts in millions) (Amounts in
millions) Selling and marketing expenses (GAAP) $ 7.8
$ 6.3 $ 7.8 $ 30.2 $ 26.3 Less:
Share-based compensation expense 0.1 0.1 0.1 0.4 0.4 Adjusted
selling and marketing expenses (excluding share-based compensation
expense) (Non-GAAP)
$ 7.7 $ 6.2 $ 7.7 $ 29.8 $ 26.0
Reconciliation of general and
administrative expenses (GAAP to non-GAAP)
Three months ended Year
ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
(Amounts in millions) (Amounts in
millions) General and administrative expenses (GAAP) $ 14.2
$ 13.0 $ 15.1
$ 57.1 $ 51.3 Less: Share-based compensation
expense 0.6 1.3 1.2 3.9 3.9
Adjusted general and administrative
expenses (excluding share-based compensation expense)
(Non-GAAP)
$ 13.6 $ 11.7 $ 13.9 $ 53.2 $ 47.4
Reconciliation of operating profit
(GAAP to non-GAAP)
Three months ended Year
ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
(Amounts in millions) (Amounts in
millions) Operating profit (GAAP) $ 10.2 $ 8.7
$ 7.8
$ 30.1 $ 28.0 Add: Amortization of intangible assets
6.7 7.1 6.6 26.4 29.5 Add: Share-based compensation expense 0.9 1.7
1.3 5.3 5.3
Adjusted operating profit (excluding
amortization of intangible assets and
share-based compensation expense)
$ 17.9 $ 17.4 $ 15.8 $ 61.8 $ 62.7
Reconciliation of profit (GAAP to
non-GAAP)
Three months ended Year
ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
(Amounts in millions) (Amounts in millions) Profit
(GAAP) $ 8.2 $ 4.4 $ 6.1
$ 21.4 $ 12.5 Add: Amortization of intangible assets 6.7 7.1
6.6 26.4 29.5 Add: Share-based compensation expense 0.9 1.7 1.3 5.3
5.3 Adjusted net income (excluding
amortization of intangible assets and
share-based compensation
expense) (Non-GAAP)
$ 15.8 $ 13.2 $ 14.0 $ 53.1 $ 47.3
Reconciliation of basic income per ADS
(GAAP to non-GAAP)
Three months ended Year ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
Basic earnings per ADS (GAAP) $ 0.16 $ 0.09 $
0.12
$ 0.43 $ 0.28 Add: Adjustments for amortization of
intangible assets and share-based compensation expense 0.15 0.19
0.16 0.63 0.77 Adjusted basic net income per ADS (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 0.31 $ 0.28 $ 0.28 $ 1.06 $ 1.05
Reconciliation of diluted income per
ADS (GAAP to non-GAAP)
Three months ended Year ended
Mar 31,2013
Mar 31,2012
Dec 31,2012
Mar 31,2013
Mar 31,2012
Diluted earnings per ADS (GAAP) $ 0.16 $ 0.09
$ 0.12
$ 0.41 $ 0.27 Add: Adjustments for amortization of
intangible assets and share-based
compensation expense
0.15 0.18 0.15 0.62 0.75 Adjusted diluted net income per ADS
(excluding amortization of intangible
assets and share-based compensation
expense) (Non-GAAP)
$ 0.30 $ 0.27 $ 0.27 $ 1.03 $ 1.02
WNS (HOLDINGS)
LIMITED CONSOLIDATED BALANCE SHEETS (Amounts in
millions, except share and per share data)
As atMarch
31,2013
As atMarch
31,2012
ASSETS Current assets: Cash and cash equivalents $ 27.9 $
46.7 Investments 46.5 26.4 Trade receivables, net 64.4 66.4
Unbilled revenue 25.5 35.9 Funds held for clients 19.9 20.7
Derivative assets 7.6 3.7 Prepayments and other current assets 12.0
25.8 Total current assets 203.8
225.6 Non-current assets:
Goodwill 87.1 86.7 Intangible assets 92.1 115.1 Property and
equipment, net 48.4 45.4 Derivative assets 3.8 1.5 Investments 43.2
0.0 Deferred tax assets 41.6 43.8 Other non-current assets 14.8
6.9 Total non-current assets
331.1 299.5
TOTAL ASSETS
$ 534.9 $ 525.2
LIABILITIES AND EQUITY Current liabilities:
Trade payables $ 29.3 $ 47.9 Provisions and accrued expenses 26.7
31.9 Derivative liabilities 3.9 9.8 Pension and other employee
obligations 32.7 29.0 Short term line of credit 54.9 24.0 Current
portion of long term debt 7.7 26.0 Deferred revenue 6.5 6.2 Current
taxes payable 5.2 8.2 Other liabilities 15.4
5.2 Total current liabilities 182.4
188.2 Non-current liabilities: Derivative
liabilities 1.3 1.2 Pension and other employee obligations 5.6 4.6
Long term debt 33.7 36.7 Deferred revenue 3.3 4.1 Other non-current
liabilities 4.4 2.7 Deferred tax liabilities 3.6
4.1 Total non-current liabilities 51.9
53.3
TOTAL LIABILITIES $ 234.3
$ 241.5 Shareholders' equity:
Share capital (ordinary shares $ 0.16 (10 pence) par value,
authorized 60,000,000 shares; issued: 50,588,044 and 50,078,881
shares each as at March 31, 2013 and March 31, 2012, respectively)
7.9 7.8 Share premium 269.3 263.5 Retained earnings 80.1 58.7 Other
components of equity (56.7 ) (46.4 ) Total
shareholders' equity 300.6 283.7
TOTAL LIABILITIES AND EQUITY $
534.9
$ 525.2
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