WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global Business Process Management (BPM) services, today announced
results for the fiscal 2016 third quarter ended December 31,
2015.
Highlights – Fiscal 2016 Third
Quarter:
GAAP
Financials
•
Revenue of $144.4 million, up 6.2% from
$136.0 million in Q3 of last year and up 2.4% from $141.0 million
last quarter
•
Profit of $15.7 million, compared to
$16.5 million in Q3 of last year and $15.5 million last
quarter
•
Diluted earnings per ADS of $0.30,
compared to $0.31 in Q3 of last year and $0.29 last quarter
Non-GAAP
Financial Measures*
•
Revenue less repair payments of $135.9
million, up 5.9% from $128.4 million in Q3 of last year and up 1.9%
from $133.3 million last quarter
•
Adjusted Net Income (ANI) of $26.4
million, compared to $25.1 million in Q3 of last year and $27.1
million last quarter
•
Adjusted diluted earnings per ADS of
$0.50, compared to $0.47 in Q3 of last year and $0.51 last
quarter
Other
Metrics
•
Added 5 new clients in the quarter,
expanded 6 existing relationships
•
Days sales outstanding (DSO) at 28
days
•
Global headcount of 31,340 as of
December 31, 2015
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 third quarter was
$135.9 million, representing a 5.9% increase versus the third
quarter of last year and a 1.9% increase from the previous quarter.
Excluding exchange rate impacts, constant currency revenue less
repair payments* in the fiscal third quarter grew 10.4% versus Q3
of last year, and 3.7% sequentially. Year-over-year, fiscal Q3
revenue less repair payments* was adversely impacted by continued
depreciation in the British Pound, Australian Dollar, South African
Rand and Euro against the US Dollar. These headwinds were more than
offset by revenue growth driven by both new client additions and
the expansion of existing relationships. Year-over-year revenue
improvement was broad-based, with the Shipping and Logistics,
Retail/CPG, Travel, CPS, and Utilities verticals each growing by
10% or more. Sequentially, revenue less repair payments* improved
despite headwinds from currency movements net of hedging.
Adjusted operating margin* for the third quarter was 22.1%, as
compared to 22.3% in Q3 of last year and 23.1% reported in the
prior quarter. On a year-over-year basis, adjusted operating
margin* was pressured by the impact of our annual wage increases,
one-time favorability recorded in the third quarter of last year
relating to the removal of FX collars on certain client contracts,
and a $2.2 million charge relating to the recently amended India
Payment of Bonus Act, which increased employee bonus amounts for
certain wage categories retroactively from April 1, 2014. Partially
offsetting these costs were favorable currency movements net of
hedging, improved productivity and seat utilization, and operating
leverage on higher volumes.
Adjusted net income (ANI)* in the fiscal third quarter was $26.4
million, up $1.3 million as compared to Q3 of last year and down
$0.7 million from the previous quarter. Third quarter ANI* margin
was 19.4%, as compared to 19.6% in Q3 of last year, and 20.3%
reported last quarter.
From a balance sheet perspective, WNS ended Q3 with $149.2
million in cash and investments, and no debt. In the third quarter,
the company generated $27.7 million in cash from operations, and
had $3.6 million in capital expenditures. Days sales outstanding
were 28 days, as compared to 28 days in Q3 of last year and 27 days
reported in the previous quarter.
“Our fiscal third quarter results highlight continued strength
in the company’s operating and financial performance. Q3 constant
currency revenue expanded over 10% year-over-year, and the company
delivered solid results in terms of margins, profit and free cash
flow,” said Keshav Murugesh, WNS’s Chief Executive Officer. “This
quarter, WNS added over 1,500 employees, with headcount crossing
the milestone level of 30,000 globally. Hiring was primarily in
support of three large accounts which will be ramping up over the
next few quarters. The company remains focused on investing in the
areas of domain expertise, automation, analytics and digitization
to meet the evolving needs of our clients, and to strengthen our
differentiated positioning in the BPM marketplace.”
Fiscal 2016 Guidance
WNS has updated guidance for the fiscal year ending March 31,
2016 as follows:
- Revenue less repair payments* is
expected to be between $528 million and $532 million, up from
$503.0 million in fiscal 2015. This assumes an average GBP to USD
exchange rate of 1.48 for the remainder of fiscal 2016.
- ANI* is expected to range between $99
million and $101 million versus $92.3 million in fiscal 2015. This
assumes an average USD to INR exchange rate of 66.5 for the
remainder of fiscal 2016.
- Based on a diluted share count of 53.2
million shares, the company expects adjusted diluted earnings* per
ADS to be in the range of $1.86 to $1.90.
“The company has updated our forecast for fiscal 2016 based on
current visibility levels and exchange rates,” said Sanjay Puria,
WNS’s Chief Financial Officer. “Our revised guidance for the year
reflects top line growth of 5% to 6%, or 10% to 11% on a constant
currency* basis. We currently have over 99% visibility to the
midpoint of the range.”
Conference Call
WNS will host a conference call on January 14, 2016 at 8:00 am
(Eastern) to discuss the company's quarterly results. To
participate in the call, please use the following details:
+1-866-318-8613; international dial-in +1-617-399-5132; participant
passcode 43898190. A replay will be available for one week
following the call at +1-888-286-8010; international dial-in
+1-617-801-6888; passcode 10451723, 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 December 31, 2015, WNS had 31,340
professionals across 39 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 2016
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 5, 2015.
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 5, 2015.
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
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Revenue $ 144.4 $ 136.0 $
141.0 Cost of revenue 93.8
85.1 90.5 Gross
profit 50.5 50.8 50.5 Operating expenses: Selling and marketing
expenses 7.9 7.7 8.0 General and administrative expenses 19.7 18.8
20.4 Foreign exchange loss/ (gain), net (2.8 ) (1.8 ) (3.6 )
Amortization of intangible assets 6.3
6.0 6.5
Operating profit 19.3 20.1 19.3 Other income, net (1.9 ) (3.1 )
(1.8 ) Finance expense 0.1
0.3 0.1 Profit
before income taxes 21.2 22.8 21.0 Provision for income taxes
5.4 6.3
5.5 Profit $ 15.7
$ 16.5 $ 15.5
Earnings per share of ordinary share Basic $ 0.31
$ 0.32 $ 0.30
Diluted $ 0.30 $ 0.31
$ 0.29
Growth of revenue (GAAP) and revenue
less repair payments (non-GAAP)
Three months ended
Three months ended
Dec 31, 2015 compared to
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Dec 31,
2014
Sep 30,
2015
(Amounts in millions) (% growth) Revenue (GAAP) $
144.4 $ 136.0 $ 141.0 6.2
% 2.4 % Less: Payments to repair centers 8.5
7.6 7.7 11.5 % 9.4 % Revenue less repair payments (Non-GAAP) $
135.9 $ 128.4 $ 133.3 5.9 % 1.9 %
Constant currency revenue less repair
payments (Non-GAAP)
$ 134.2 $ 121.6 $ 129.5 10.4 % 3.7 %
Reconciliation of cost of revenue (GAAP
to non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
(Amounts in millions) Cost of revenue (GAAP) $ 93.8
$ 85.1 $ 90.5 Less: Payments to
repair centers 8.5 7.6 7.7 Less: Share-based compensation expense
0.5 0.2 0.4
Adjusted cost of revenue (excluding
payment to repair centers and share-based compensation expense)
(Non-GAAP)
$ 84.9 $ 77.3 $ 82.4
Reconciliation of gross profit (GAAP to
non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
(Amounts in millions) Gross profit (GAAP) $ 50.5
$ 50.8 $ 50.5 Add: Share-based
compensation expense 0.5 0.2 0.4 Adjusted gross profit (excluding
share-based compensation expense) (Non-GAAP) $ 51.0 $ 51.0 $ 50.9
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Gross profit as a percentage of revenue (GAAP) 35.0 % 37.4 %
35.8
% Adjusted gross profit (excluding share-based compensation
expense) as a percentage of revenue less repair payments (Non-GAAP)
37.5 % 39.8 % 38.2 %
Reconciliation of selling and marketing
expenses (GAAP to non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
(Amounts in millions) Selling and marketing expenses (GAAP)
$ 7.9 $ 7.7 $ 8.0 Less:
Share-based compensation expense 0.3 0.2 0.2 Adjusted selling and
marketing expenses (excluding share-based compensation expense)
(Non-GAAP) $ 7.6 $ 7.5 $ 7.8
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Selling and marketing expenses as a percentage of revenue (GAAP)
5.5 % 5.6 % 5.7 % Adjusted selling and marketing expenses
(excluding share-based compensation expense) as a percentage of
revenue less repair payments (Non-GAAP) 5.6 % 5.9 % 5.9 %
Reconciliation of general and
administrative expenses (GAAP to non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
(Amounts in millions) General and administrative expenses
(GAAP) $ 19.7 $ 18.8 $
20.4 Less: Share-based compensation expense 3.6 2.2 4.5
Adjusted general and administrative
expenses (excluding share-based compensation expense)
(Non-GAAP)
$ 16.1 $ 16.6 $ 15.8
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
General and administrative expenses as a percentage of revenue
(GAAP) 13.7 % 13.9 % 14.5 % Adjusted general and administrative
expenses (excluding share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP) 11.9 % 12.9 %
11.9 %
Reconciliation of operating profit
(GAAP to non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
(Amounts in millions) Operating profit (GAAP) $ 19.3
$ 20.1 $ 19.3 Add: Amortization
of intangible assets 6.3 6.0 6.5 Add: Share-based compensation
expense 4.3 2.6 5.1 Adjusted operating profit (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 30.0 $ 28.7 $ 30.8
Three months
ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Operating profit as a percentage of revenue (GAAP) 13.4 % 14.8 %
13.7 % Adjusted operating profit (excluding amortization of
intangible assets and share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP) 22.1 % 22.3 %
23.1 %
Reconciliation of profit (GAAP to
non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
(Amounts in millions) Profit (GAAP) $ 15.7
$ 16.5 $ 15.5 Add: Amortization of
intangible assets 6.3 6.0 6.5 Add: Share-based compensation expense
4.3 2.6 5.1 Adjusted net income (excluding amortization of
intangible assets and share-based compensation expense) (Non-GAAP)
$ 26.4 $ 25.1 $ 27.1
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Profit as a percentage of revenue (GAAP) 10.9 % 12.2 % 11.0 %
Adjusted net income (excluding amortization of intangible assets
and share-based compensation expense) as a percentage of revenue
less repair payments (Non-GAAP) 19.4 % 19.6 % 20.3 %
Reconciliation of basic income per ADS
(GAAP to non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Basic earnings per ADS (GAAP) $ 0.31 $ 0.32
$ 0.30 Add: Adjustments for amortization of
intangible assets and share-based compensation expense 0.21 0.17
0.23 Adjusted basic net income per ADS (excluding amortization of
intangible assets and share-based compensation expense) (Non-GAAP)
$ 0.52 $ 0.49 $ 0.53
Reconciliation of diluted income per
ADS (GAAP to non-GAAP)
Three months ended
Dec 31,
2015
Dec 31,
2014
Sep 30,
2015
Diluted earnings per ADS (GAAP) $ 0.30 $ 0.31
$ 0.29 Add: Adjustments for amortization of
intangible assets and share-based compensation expense 0.20 0.16
0.22 Adjusted diluted net income per ADS (excluding amortization of
intangible assets and share-based compensation expense) (Non-GAAP)
$ 0.50 $ 0.47 $ 0.51
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(Unaudited, amounts in millions, except
share and per share data)
As at
December 31,
2015
As at
March 31,
2015
ASSETS Current assets: Cash and cash equivalents $ 39.3 $
32.4 Investments 109.8 133.5 Trade receivables, net 56.7 55.8
Unbilled revenue 44.1 39.7 Funds held for clients 13.2 12.7
Derivative assets 12.5 24.2 Prepayments and other current assets
24.2 16.8 Total current assets 299.9 315.1
Non-current assets:
Goodwill 76.9 79.1 Intangible assets 32.7 43.3 Property and
equipment 45.6 48.2 Derivative assets 3.0 5.7 Deferred tax assets
21.6 21.3 Other non-current assets 19.8 17.6 Total non-current
assets 199.6 215.2
TOTAL ASSETS $ 499.5
$ 530.3 LIABILITIES AND EQUITY Current
liabilities: Trade payables $ 20.4 $ 22.7 Provisions and accrued
expenses 25.0 25.6 Derivative liabilities 3.8 1.8 Pension and other
employee obligations 42.9 40.4 Short term line of credit - 12.9
Current portion of long term debt - 12.8 Deferred revenue 3.7 3.9
Current taxes payable 1.4 2.0 Other liabilities 4.7 5.9 Total
current liabilities 101.9 128.0 Non-current liabilities: Derivative
liabilities 0.7 0.4 Pension and other employee obligations 6.7 6.1
Deferred revenue 0.2 0.4 Other non-current liabilities 4.3 4.0
Deferred tax liabilities 2.4 2.3 Total non-current liabilities 14.3
13.2
TOTAL LIABILITIES 116.2 141.2 Shareholders'
equity: Share capital (ordinary shares $ 0.16 (10 pence) par value,
authorized 60,000,000 shares; issued:52,328,326 and 51,950,662
shares each as at December 31, 2015 and March 31, 2015,
respectively) 8.2 8.1 Share premium 301.4 286.8 Retained earnings
224.3 180.3 Other components of equity (120.2) (86.2)
Total shareholders’ equity including shares held in treasury 413.7
389.1 Less: 1,100,000 shares as of December 31, 2015 and Nil shares
as of March 31, 2015, held in treasury, at cost (30.5)
— Total shareholders’ equity 383.3 389.1
TOTAL LIABILITIES AND EQUITY $ 499.5 $
530.3
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160114005499/en/
WNS (Holdings) LimitedDavid MackeyCorporate SVP – Finance
& Head of Investor Relations+1 (201)
942-6261david.mackey@wns.comorArchana RaghuramHead –
Corporate Communications+91 (22) 4095
2397archana.raghuram@wns.compr@wns.com
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