WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global Business Process Management (BPM)** services, today
announced results for the 2014 fiscal second quarter ended
September 30, 2013.
Highlights – Fiscal Second Quarter 2014:
GAAP Financials
- Revenue of $123.1 million, up 8.8% from $113.1 million in Q2
of last year and up 0.8% from $122.1 million last quarter
- Profit of $9.3 million, compared to $4.3 million in Q2 of
last year and $6.7 million last quarter
- Diluted earnings per ADS of $0.18, compared to $0.08 in Q2
of last year and $0.13 last quarter
Non-GAAP Financial
Measures*
- Revenue less repair payments of $115.4 million, up 7.6% from
$107.3 million in Q2 of last year and up 1.4% from $113.8 million
last quarter
- Adjusted Net Income (ANI) of $17.2 million, compared to
$12.2 million in Q2 of last year and $14.4 million last
quarter
- Adjusted diluted earnings per ADS of $0.33, compared to
$0.24 in Q2 of last year and $0.28 last quarter
Other Metrics
- Added 6 new clients in the quarter, expanded 9 existing
relationships
- Days sales outstanding (DSO) at 30 days
- Global headcount of 26,630 as of September 30, 2013
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* in the fiscal second quarter was
$115.4 million, representing a 7.6% increase versus the second
quarter of last year and a 1.4% increase from the previous quarter.
Year-over-year, revenue improvement was broad-based with the growth
rate paced by strength in the Banking & Financial Services,
Utilities, and Shipping & Logistics verticals. On a
year-over-year basis, revenue was pressured by currency headwinds
resulting from depreciation in the British pound, South African
rand and Australian dollar against the US dollar. Excluding
exchange rate impacts, constant currency revenue less repair
payments* in the second quarter grew 9.8% year-over-year and 3.2%
sequentially.
Adjusted operating margin* for the quarter was 16.2%, as
compared to 13.7% in Q2 of last year, and 13.9% reported in the
first quarter. On a year-over-year basis, operating margin improved
as a result of depreciation in the Indian rupee against the US
dollar, and operating leverage associated with higher revenue.
Partially offsetting this favorability were investments in global
infrastructure which reduced seat utilization, revenue headwinds
from a stronger US dollar, and the impact of our annual wage
increases. The sequential improvement in adjusted operating margin*
from Q1 to Q2 was largely driven by operating leverage and enhanced
productivity.
Adjusted net income (ANI)* in the fiscal second quarter was
$17.2 million, up $5.0 million as compared to Q2 of last year, and
up $2.7 million from the previous quarter. The second quarter ANI*
margin was 14.9%, as compared to 11.4% in Q2 of last year, and
12.7% reported last quarter.
From a balance sheet perspective, WNS ended the fiscal second
quarter with $108.4 million in cash and investments and $91.1
million of gross debt. In the second quarter, the company generated
$25.3 million in cash from operations, and had $5.0 million in
capital expenditures. Days sales outstanding were 30 days,
representing a decrease from 38 days reported in Q2 of last year
and 31 days reported in the previous quarter.
“WNS was able to post solid constant currency revenue growth in
the second quarter, and significantly expand our adjusted operating
and net income margins. During the quarter, we continued to make
progress in growing the overall size of our new business pipeline,
and moving deals along towards final decisions. The company added 6
new logos this quarter, including our third large deal of the year
with a new client in the Retail/CPG vertical,” said Keshav
Murugesh, WNS’s Chief Executive Officer.
“We believe the macro environment for BPM services is healthy,
and WNS remains committed to capitalizing on our differentiated
position in the market to meet or exceed the industry’s secular
growth trends. While the timing for some project decisions and deal
ramps remains uncertain, we continue to be excited about our
business opportunities and the client response to our offerings and
approach.”
Fiscal 2014 Guidance
WNS has updated guidance for the fiscal year ending March 31,
2014 as follows:
- Revenue less repair payments* is
expected to be between $464 million and $476 million, up from
$436.1 million in fiscal 2013. This assumes an average GBP to USD
exchange rate of 1.60 for the remainder of fiscal 2014.
- ANI* is expected to range between $68
million and $72 million, up from $53.1 million in fiscal 2013. This
assumes an average USD to INR exchange rate of 62.0 for the
remainder of fiscal 2014.
“Consistent with the company’s guidance philosophy, our updated
forecast for fiscal 2014 is based on current visibility levels and
exchange rates. Our revised guidance for the year reflects top line
growth of 6% to 9%, with 99% visibility to the midpoint of the
range. This guidance represents 7% to 10% revenue growth on a
constant currency* basis. Our ANI* guidance reflects 28% to 36%
year-over-year improvement. We will continue to invest in creating
new service offerings, enhanced domain capabilities and
technology-enabled solutions to meet the needs of our clients. At
the same time, we are focused on leveraging our existing
investments in sales, infrastructure and our capability creation
group to fund these investments and drive sustainable margin
improvement,” said Sanjay Puria, WNS’s Chief Financial Officer.
Conference Call
WNS will host a conference call on October 16, 2013 at 8:00 am
(Eastern) to discuss the company's quarterly results. To
participate in the call, please use the following details:
+1-866-515-2911; international dial-in +1-617-399-5125; participant
passcode 87795514. A replay will be available for one week
following the call at +1-888-286-8010; international dial-in
+1-617-801-6888; passcode 35977049, 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 care, technology
solutions, research and analytics and industry specific back office
and front office processes. As of September 30, 2013, WNS had
26,630 professionals across 32 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 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 BPM 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 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.
**
Previously described as Business Process Outsourcing (BPO) in our
prior annual reports on Form 20-F and current reports on Form 6-K
containing our quarterly results.
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 2, 2013.
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 2, 2013.
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.
Commencing from this release relating to our results for the three
and six months ended September 30, 2013, 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. Previously, our constant
currency revenue less repair payments was presented by
recalculating only prior period’s revenue less repair payments
denominated in pound sterling and euro using the foreign exchange
rate used for the latest period. A recomputation of our constant
currency revenue less repair repayments for periods prior to the
three and six months ended September 30, 2013 based on this new
method of calculation would not be materially different from our
previously reported constant currency revenue less repair
repayments as the amount of our revenues denominated in currencies
other than the US dollar, pound sterling and Euro was previously
immaterial.
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
Sep 30,2013
Sep 30,2012
Jun 30,2013
Revenue $ 123.1 $ 113.1 $ 122.1 Cost of revenue 79.7
75.3 84.4 Gross profit 43.4 37.8 37.7
Operating expenses: Selling and marketing expenses 9.0 7.2 7.8
General and administrative expenses 13.0 15.2 15.0 Foreign exchange
loss, net 4.6 2.0 0.5 Amortization of intangible assets 5.8
6.5 6.2 Operating profit 10.9
6.8 8.2 Other income, net (1.8 ) (1.0 ) (2.2 ) Finance expense
0.8 0.9 0.8 Profit before
income taxes 12.0 6.9 9.6 Provision for income taxes 2.6
2.5 2.8 Profit $ 9.3 $
4.3 $ 6.7 Earnings per share of ordinary share
Basic $ 0.18 $ 0.09 $ 0.13 Diluted $ 0.18
$ 0.08 $ 0.13
Growth of revenue (GAAP) and revenue
less repair payments (non-GAAP)
Three months ended
Three months endedSep 30, 2013
compared to
Sep 30,2013
Sep 30,2012
Jun 30,2013
Sep 30,2012
Jun 30,2013
(Amounts in millions)
(% growth)
Revenue (GAAP) $ 123.1 $ 113.1
$
122.1
8.8 % 0.8 % Less: Payments to repair centers 7.7 5.8 8.4 32.3 %
(8.0 )% Revenue less repair payments (Non-GAAP) $ 115.4 $ 107.3 $
113.8 7.6 % 1.4 % Constant currency revenue less
repair payments (Non-GAAP)
117.5 107.1 113.9 9.8 % 3.2 %
Reconciliation of cost of revenue (GAAP
to non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
(Amounts in millions) Cost of revenue (GAAP) $ 79.7 $ 75.3
$
84.4 Less: Payments to repair centers 7.7 5.8 8.4 Less: Share-based
compensation expense 0.4 0.3 0.3 Adjusted cost of revenue
(excluding payment to repair centers and share-based compensation
expense) (Non-GAAP) $ 71.6 $ 69.2 $ 75.7
Reconciliation of gross profit (GAAP to
non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
(Amounts in millions) Gross profit (GAAP) $ 43.4 $ 37.8 $
37.7 Add: Share-based compensation expense 0.4 0.3 0.3 Adjusted
gross profit (excluding share-based compensation expense)
(Non-GAAP) $ 43.8 $ 38.0 $ 38.0
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
Gross profit as a percentage of revenue (GAAP) 35.3 % 33.4 % 30.9 %
Adjusted gross profit (excluding share-based compensation expense)
as a percentage of revenue less repair payments (Non-GAAP) 38.0 %
35.5 % 33.4 %
Reconciliation of selling and marketing
expenses (GAAP to non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
(Amounts in millions) Selling and marketing expenses (GAAP)
$ 9.0 $ 7.2 $ 7.8 Less: Share-based compensation expense 0.1 0.1
0.1 Adjusted selling and marketing expenses (excluding share-based
compensation expense) (Non-GAAP) $ 8.9 $ 7.1 $ 7.8
Three
months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
Selling and marketing expenses as a percentage of revenue (GAAP)
7.3 % 6.4 % 6.4 % Adjusted selling and marketing expenses
(excluding share-based compensation expense) as a percentage of
revenue less repair payments (Non-GAAP) 7.7 % 6.6 % 6.8 %
Reconciliation of general and
administrative expenses (GAAP to non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
(Amounts in millions) General and administrative expenses
(GAAP) $ 13.0 $ 15.2 $ 15.0 Less: Share-based compensation expense
1.5 1.0 1.1 Adjusted general and administrative expenses (excluding
share-based compensation expense) (Non-GAAP) $ 11.5 $ 14.2 $ 13.9
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
General and administrative expenses as a percentage of revenue
(GAAP) 10.6 % 13.4 % 12.3 % Adjusted general and administrative
expenses (excluding share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP) 10.0 % 13.2 %
12.2 %
Reconciliation of operating profit
(GAAP to non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
(Amounts in millions) Operating profit (GAAP) $ 10.9 $ 6.8 $
8.2 Add: Amortization of intangible assets 5.8 6.5 $ 6.2 Add:
Share-based compensation expense 2.0 1.4 1.5 Adjusted operating
profit (excluding amortization of intangible assets and share-based
compensation expense) (Non-GAAP) $ 18.7 $ 14.7 $ 15.9
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
Operating profit as a percentage of revenue (GAAP) 8.9 % 6.0 % 6.7
% Adjusted operating profit (excluding amortization of intangible
assets and share-based compensation expense) as a percentage of
revenue less repair payments (Non-GAAP) 16.2 % 13.7 % 13.9 %
Reconciliation of profit (GAAP to
non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
(Amounts in millions) Profit (GAAP) $ 9.3 $ 4.3 $ 6.7 Add:
Amortization of intangible assets 5.8 6.5 6.2 Add: Share-based
compensation expense 2.0 1.4 1.5 Adjusted net income (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 17.2 $ 12.2 $ 14.4
Three months
ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
Profit as a percentage of revenue (GAAP) 7.6 % 3.8 % 5.5 % Adjusted
net income (excluding amortization of intangible assets and
share-based compensation expense) as a percentage of revenue less
repair payments (Non-GAAP) 14.9 % 11.4 % 12.7 %
Reconciliation of basic income per ADS
(GAAP to non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
Basic earnings per ADS (GAAP) $ 0.18 $ 0.09 $ 0.13 Add: Adjustments
for amortization of intangible assets and share-based compensation
expense 0.16 0.15 0.15 Adjusted basic net income per ADS (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 0.34 $ 0.24 $ 0.29
Reconciliation of diluted income per
ADS (GAAP to non-GAAP)
Three months ended
Sep 30,2013
Sep 30,2012
Jun 30,2013
Diluted earnings per ADS (GAAP) $ 0.18 $ 0.08 $ 0.13 Add:
Adjustments for amortization of intangible assets and share-based
compensation expense. 0.15 0.16 0.15 Adjusted diluted net income
per ADS (excluding amortization of intangible assets and
share-based compensation expense) (Non-GAAP) $ 0.33 $ 0.24 $ 0.28
WNS (HOLDINGS) LIMITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in
millions, except share and per share data)
As atSeptember 30, 2013
As atMarch 31, 2013
ASSETS Current assets: Cash and cash equivalents $ 29.7 $
27.9 Investments 78.7 46.5 Trade receivables, net 58.4 64.4
Unbilled revenue 30.7 25.5 Funds held for clients 18.0 19.9
Derivative assets 4.4 7.6 Prepayments and other current assets
15.5 12.0 Total current assets
235.3 203.8 Non-current assets: Goodwill 82.9
87.1 Intangible assets 74.4 92.1 Property and equipment 45.2 48.4
Derivative assets 1.7 3.8 Investments 0.0 43.2 Deferred tax assets
45.9 41.6 Other non-current assets 17.0 14.8
Total non-current assets 267.1 331.1
TOTAL ASSETS $ 502.5 $ 534.9
LIABILITIES AND EQUITY Current liabilities: Trade payables $
23.5 $ 29.3 Provisions and accrued expenses 25.1 26.7 Derivative
liabilities 20.8 3.9 Pension and other employee obligations 29.9
32.7 Short term line of credit 52.2 54.9 Current portion of long
term debt 10.3 7.7 Deferred revenue 5.7 6.5 Current taxes payable
4.4 5.2 Other liabilities 9.3 15.4
Total current liabilities 181.3 182.4
Non-current liabilities: Derivative liabilities 9.3 1.3 Pension and
other employee obligations 4.7 5.6 Long term debt 28.6 33.7
Deferred revenue 2.7 3.3 Other non-current liabilities 3.7 4.4
Deferred tax liabilities 3.3 3.6 Total
non-current liabilities 52.3 51.9
TOTAL LIABILITIES $ 233.5 $ 234.3
Shareholders' equity: Share capital (ordinary shares $ 0.16 (10
pence) par value, authorized 60,000,000 shares; issued: 51,000,180
and 50,588,044 shares each as at September 30, 2013 and March 31,
2013, respectively) 8.0 7.9 Share premium 273.5 269.3 Retained
earnings 96.2 80.1 Other components of equity (108.7 )
(56.7 ) Total shareholders' equity 269.0
300.6
TOTAL LIABILITIES AND EQUITY $ 502.5
$ 534.9
Investors:WNS (Holdings)
LimitedDavid MackeyCorporate SVP–Finance & Head of
Investor Relations+1 (201)
942-6261david.mackey@wns.comorMedia:WNS (Holdings) LimitedArchana
RaghuramHead – Corporate Communications+91 (22) 4095
2397archana.raghuram@wns.com ; pr@wns.com
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