WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global Business Process Management (BPM) services, today announced
results for the 2015 fiscal first quarter ended June 30, 2014.
Highlights – Fiscal First Quarter 2015:
GAAP Financials
- Revenue of $131.0 million, up 7.3%
from $122.1 million in Q1 of last year and up 0.6% from $130.3
million last quarter
- Profit of $12.1 million, compared to
$6.7 million in Q1 of last year and $13.4 million last
quarter
- Diluted earnings per ADS of $0.23,
compared to $0.13 in Q1 of last year and $0.25 last
quarter
Non-GAAP Financial
Measures*
- Revenue less repair payments of
$122.1 million, up 7.3% from $113.8 million in Q1 of last year and
down 0.5% from $122.7 million last quarter
- Adjusted Net Income (ANI) of $20.4
million, compared to $14.4 million in Q1 of last year and $20.9
million last quarter
- Adjusted diluted earnings per ADS of
$0.39, compared to $0.28 in Q1 of last year and $0.40 last
quarter
Other Metrics
- Added 6 new clients in the quarter,
expanded 10 existing relationships
- Days sales outstanding (DSO) at 32
days
- Global headcount of 27,760 as of
June 30, 2014
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 first quarter was
$122.1 million, representing a 7.3% increase versus the first
quarter of last year, and a 0.5% decrease from the previous
quarter. Fiscal Q1 revenue was adversely impacted by the transition
of a large online travel agency (OTA) client to another OTA
pursuant to a strategic marketing agreement, and pricing and
productivity headwinds from a proposed five plus year contract
extension with a major client. Appreciation in the British Pound
against the US dollar partially offset these headwinds on both a
year-over-year and sequential basis. Excluding exchange rate
impacts, constant currency revenue less repair payments* in the
first quarter grew 3.4% versus Q1 of last year, and fell 2.8%
sequentially.
Adjusted operating margin* for the quarter was 17.9%, as
compared to 13.9% in Q1 of last year, and 19.1% reported in the
fourth quarter. On a year-over-year basis, operating margin
increased as a result of exchange rate favorability, improved
productivity and operating leverage associated with higher revenue.
Partially offsetting this favorability were pricing and
productivity headwinds associated with the proposed major client
contract extension, and the impact of our annual wage increases.
The sequential reduction in adjusted operating margin* from Q4 to
Q1 was driven by headwinds from the proposed major client contract
extension and the impact of annual wage increases. These negative
impacts were partially offset by exchange rate favorability,
improved productivity and an increase in seat utilization.
Adjusted net income (ANI)* in the fiscal first quarter was $20.4
million, up $6.0 million as compared to Q1 of last year and down
$0.6 million from the previous quarter. First quarter ANI* margin
was 16.7%, as compared to 12.7% in Q1 of last year, and 17.1%
reported last quarter.
From a balance sheet perspective, WNS ended the fiscal first
quarter with $156.4 million in cash and investments and $83.0
million of gross debt. In the first quarter, the company generated
$13.2 million in cash from operations, and had $3.9 million in
capital expenditures. Days sales outstanding were 32 days, as
compared to 31 days in Q1 of last year and 30 days reported in the
previous quarter.
“We are encouraged by the start to our fiscal year. While
revenue in the first quarter was adversely impacted by the online
travel client ramp-down and headwinds from the proposed contract
extension with a major client, we continued to make solid progress
in our underlying business. WNS added 6 new clients and signed two
new ‘large deals’ in Q1. In addition, adjusted operating margins
and adjusted net income expanded versus the first quarter of last
year, coming in at 17.9% and 16.7% respectively,” said Keshav
Murugesh, WNS’s Chief Executive Officer.
“The pipeline remains strong for both hunting and farming
opportunities, and we continue to target closure of at least 6
‘large deals’ in fiscal 2015. We believe that our deep domain
expertise, vertical approach and client-centric model are
resonating well with both existing clients and new prospects, and
the company remains focused on leveraging these capabilities to
grow revenue and maintain profit margins at or above industry
levels.”
Fiscal 2015 Guidance
WNS has updated guidance for the fiscal year ending March 31,
2015 as follows:
- Revenue less repair payments* is
expected to be between $501 million and $528 million, up from
$471.5 million in fiscal 2014. This assumes an average GBP to USD
exchange rate of 1.70 for the remainder of fiscal 2015.
- ANI* is expected to range between $81
million and $87 million, up from $72.4 million in fiscal 2014. This
assumes an average USD to INR exchange rate of 60.0 for the
remainder of fiscal 2015. Based on a diluted share count of 53.3
million shares, the company expects adjusted diluted earnings* per
ADS to be in the range of $1.52 to $1.63.
“The company has updated our forecast for fiscal 2015 based on
current visibility levels and exchange rates. Our revised guidance
for the year reflects top line growth of 6% to 12%, with 95%
visibility to the midpoint of the range. This guidance represents
2% to 7% revenue growth on a constant currency* basis. WNS
continues to expect profitability to expand faster than revenue,
with our ANI* guidance reflecting 12% to 20% year-over-year
improvement. Guidance excludes the potential impact from a change
in taxability of our Fixed Maturity Plan investments proposed in
last week’s India budget. If passed by both houses of Parliament in
its current form, the budget proposal would result in WNS incurring
incremental taxes of approximately $3.0 million in fiscal 2015,”
said Sanjay Puria, WNS’s Chief Financial Officer.
Conference Call
WNS will host a conference call on July 17, 2014 at 8:00 am
(Eastern) to discuss the company's quarterly results. To
participate in the call, please use the following details:
+1-800-638-4817; international dial-in +1-617-614-3943; participant
passcode 25412786. A replay will be available for one week
following the call at +1-888-286-8010; international dial-in
+1-617-801-6888; passcode 88041555, 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 June 30, 2014, WNS had 27,760
professionals across 34 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 2015
guidance and future profitability, and expected foreign currency
exchange rates. Forward-looking statements inherently involve risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements. Such
risks and uncertainties include but are not limited to worldwide
economic and business conditions; political or economic instability
in the jurisdictions where we have operations; 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 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
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 14, 2014.
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 14, 2014.
Constant currency revenue less repair payments is a non-GAAP
financial measure. We present constant currency revenue less repair
payments so that revenue less repair payments may be viewed without
the impact of foreign currency exchange rate fluctuations, thereby
facilitating period-to-period comparisons of business performance.
Constant currency revenue less repair payments is presented by
recalculating prior period’s revenue less repair payments
denominated in currencies other than in US dollars using the
foreign exchange rate used for the latest period, without taking
into account the impact of hedging gains/losses. Our non-US dollar
denominated revenues include, but are not limited to, revenues
denominated in pound sterling, South African rand, Australian
dollar and euro.
WNS also presents (1) adjusted operating margin, which refers to
adjusted operating profit (calculated as operating profit excluding
amortization of intangible assets and share-based compensation
expense) as a percentage of revenue less repair payments, and (2)
ANI, which is calculated as profit excluding amortization of
intangible assets and share-based compensation expense, and other
non-GAAP measures included in this release as supplemental measures
of its performance. WNS presents these non-GAAP measures because it
believes they assist investors in comparing its performance across
reporting periods on a consistent basis by excluding items that it
does not believe are indicative of its core operating performance.
In addition, it uses these non-GAAP measures (i) as a factor in
evaluating management’s performance when determining incentive
compensation and (ii) to evaluate the effectiveness of its business
strategies. These non-GAAP measures are not meant to be considered
in isolation or as a substitute for WNS’s financial results
prepared in accordance with IFRS.
WNS (HOLDINGS) LIMITED CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (Unaudited, amounts in millions, except share and
per share data) Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
Revenue $ 131.0 $ 122.1 $ 130.3 Cost of
revenue 86.2 84.4 81.9 Gross profit 44.8 37.7 48.3 Operating
expenses: Selling and marketing expenses 7.7 7.8 9.5 General and
administrative expenses 16.2 15.0 14.2 Foreign exchange loss/
(gain), net 1.3 0.5 2.7 Amortization of intangible assets
6.1 6.2 5.9 Operating profit
13.5 8.2 15.9 Other income, net (3.1 ) (2.2 ) (3.1 ) Finance
expense 0.5 0.8 0.7
Profit before income taxes 16.1 9.6 18.3 Provision for income taxes
4.0 2.8 4.9 Profit $ 12.1
$ 6.7 $ 13.4 Earnings per share of
ordinary share Basic $ 0.23 $ 0.13 $ 0.26
Diluted $ 0.23 $ 0.13 $ 0.25
Growth of revenue (GAAP) and revenue
less repair payments (non-GAAP)
Three months ended
Three months endedJun 30, 2014
compared to
Jun 30,2014
Jun 30,2013
Mar 31,2014
Jun 30,2013
Mar 31,2014
(Amounts in millions) (%
growth) Revenue (GAAP) $ 131.0 $ 122.1 $ 130.3
7.3 % 0.6 % Less: Payments to repair centers 8.9 8.4 7.5 6.8 % 18.9
% Revenue less repair payments (Non-GAAP) $ 122.1 $ 113.8 $ 122.7
7.3 % (0.5 )% Constant currency revenue less
repair payments (Non-GAAP)
$ 122.6 $ 118.6 $ 126.1 3.4 % (2.8 )%
Reconciliation of cost of revenue (GAAP
to non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
(Amounts in millions) Cost of revenue (GAAP) $ 86.2 $ 84.4 $
81.9 Less: Payments to repair centers 8.9 8.4 7.5 Less: Share-based
compensation expense 0.4 0.3 0.2 Adjusted cost of revenue
(excluding payment to repair centers and share-based compensation
expense) (Non-GAAP) $ 76.9 $ 75.7 $ 74.2
Reconciliation of gross profit (GAAP to
non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
(Amounts in millions) Gross profit (GAAP) $ 44.8 $ 37.7 $
48.3 Add: Share-based compensation expense 0.4 0.3 0.2 Adjusted
gross profit (excluding share-based compensation expense)
(Non-GAAP) $ 45.2 $ 38.0 $ 48.5
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
Gross profit as a percentage of revenue (GAAP) 34.2 % 30.9 % 37.1 %
Adjusted gross profit (excluding share-based compensation expense)
as a percentage of revenue less repair payments (Non-GAAP) 37.0 %
33.4 % 39.6 %
Reconciliation of selling and marketing
expenses (GAAP to non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
(Amounts in millions) Selling and marketing expenses (GAAP)
$ 7.7 $ 7.8 $ 9.5 Less: Share-based compensation expense 0.2 0.1
0.2 Adjusted selling and marketing expenses (excluding share-based
compensation expense) (Non-GAAP) $ 7.5 $ 7.8 $ 9.3
Three
months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
Selling and marketing expenses as a percentage of revenue (GAAP)
5.8 % 6.4 % 7.3 % Adjusted selling and marketing expenses
(excluding share-based compensation expense) as a percentage of
revenue less repair payments (Non-GAAP) 6.1 % 6.8 % 7.6 %
Reconciliation of general and
administrative expenses (GAAP to non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
(Amounts in millions) General and administrative expenses
(GAAP) $ 16.2 $ 15.0 $ 14.2 Less: Share-based compensation expense
1.6 1.1 1.2 Adjusted general and administrative expenses (excluding
share-based compensation expense) (Non-GAAP) $ 14.6 $ 13.9 $ 13.0
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
General and administrative expenses as a percentage of revenue
(GAAP) 12.4 % 12.3 % 10.9 % Adjusted general and administrative
expenses (excluding share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP) 12.0 % 12.2 %
10.6 %
Reconciliation of operating profit
(GAAP to non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
(Amounts in millions) Operating profit (GAAP) $ 13.5 $ 8.2 $
15.9 Add: Amortization of intangible assets 6.1 6.2 $ 5.9 Add:
Share-based compensation expense 2.2 1.5 1.6 Adjusted operating
profit (excluding amortization of intangible assets and share-based
compensation expense) (Non-GAAP) $ 21.8 $ 15.9 $ 23.5
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
Operating profit as a percentage of revenue (GAAP) 10.3 % 6.7 %
12.2 % Adjusted operating profit (excluding amortization of
intangible assets and share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP) 17.9 % 13.9 %
19.1 %
Reconciliation of profit (GAAP to
non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
(Amounts in millions) Profit (GAAP) $ 12.1 $ 6.7 $ 13.4 Add:
Amortization of intangible assets 6.1 6.2 5.9 Add: Share-based
compensation expense 2.2 1.5 1.6 Adjusted net income (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 20.4 $ 14.4 $ 20.9
Three months
ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
Profit as a percentage of revenue (GAAP) 9.2 % 5.5 % 10.3 %
Adjusted net income (excluding amortization of intangible assets
and share-based compensation expense) as a percentage of revenue
less repair payments (Non-GAAP) 16.7 % 12.7 % 17.1 %
Reconciliation of basic income per ADS
(GAAP to non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
Basic earnings per ADS (GAAP) $ 0.23 $ 0.13 $ 0.26 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) $ 0.40 $ 0.29 $ 0.41
Reconciliation of diluted income per
ADS (GAAP to non-GAAP)
Three months ended
Jun 30,2014
Jun 30,2013
Mar 31,2014
Diluted earnings per ADS (GAAP) $ 0.23 $ 0.13 $ 0.25 Add:
Adjustments for amortization of intangible assets and share-based
compensation expense. 0.16 0.15 0.14 Adjusted diluted net income
per ADS (excluding amortization of intangible assets and
share-based compensation expense) (Non-GAAP) $ 0.39 $ 0.28 $ 0.40
WNS (HOLDINGS) LIMITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in
millions, except share and per share data)
As atJune 30, 2014
As atMarch 31, 2014
ASSETS Current assets: Cash and cash equivalents $ 31.5 $
33.7 Investments 125.0 83.8 Trade receivables, net 66.5 62.0
Unbilled revenue 32.9 34.7 Funds held for clients 14.6 15.9
Derivative assets 6.7 6.8 Prepayments and other current assets
18.0 16.9 Total current assets 295.1
253.8 Non-current assets: Goodwill 86.5 85.7 Intangible assets 61.7
67.2 Property and equipment 43.8 45.2 Derivative assets 2.6 4.1
Investments - 28.7 Deferred tax assets 36.4 37.1 Other non-current
assets 18.0 16.7 Total non-current assets
248.9 284.6
TOTAL ASSETS $ 544.0
$ 538.4 LIABILITIES AND EQUITY Current
liabilities: Trade payables $ 27.6 $ 29.1 Provisions and accrued
expenses 26.2 23.9 Derivative liabilities 8.1 9.1 Pension and other
employee obligations 27.2 36.3 Short term line of credit 56.3 58.6
Current portion of long term debt 17.9 12.6 Deferred revenue 5.8
5.4 Current taxes payable 4.5 3.3 Other liabilities 6.6
6.6 Total current liabilities 180.2 184.8
Non-current liabilities: Derivative liabilities 0.6 1.4 Pension and
other employee obligations 5.7 5.2 Long term debt 8.7 13.5 Deferred
revenue 1.4 1.7 Other non-current liabilities 4.2 3.9 Deferred tax
liabilities 2.8 2.9 Total non-current liabilities
23.4 28.6
TOTAL LIABILITIES $
203.6 $ 213.5 Shareholders' equity:
Share capital (ordinary shares $0.16 (10 pence) par value,
authorized 60,000,000 shares; issued: 51,478,976 and 51,347,538
shares each as at June 30, 2014 and March 31, 2014, respectively)
8.1 8.0 Share premium 279.0 276.6 Retained earnings 133.8 121.7
Other components of equity (80.4) (81.4) Total
shareholders' equity 340.4 325.0
TOTAL LIABILITIES
AND EQUITY $ 544.0 $ 538.4
WNS (Holdings) LimitedInvestors:David MackeyCorporate
SVP–Finance & Head of Investor Relations+1 (201)
942-6261david.mackey@wns.comorMedia:Archana RaghuramHead –
Corporate Communications+91 (22) 4095
2397archana.raghuram@wns.compr@wns.com
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