Fourth Quarter 2018 Highlights:
Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA),
a location-agnostic global business process automation (“BPA”)
leader across numerous industries, announced today its financial
results for the fourth quarter and year end December 31,
2018.
Exela reported strong financial growth during
2018, with revenue of $1.59 billion, an increase of 8.9%, and
Adjusted EBITDA of $283.8 million, an increase of 15.7% on a
year-over-year basis. Adjusted EBITDA margins for 2018 were 17.9%,
an increase of 110bps from 16.8% in 2017. Exela also invested by
expanding business development teams in Americas and in Europe to
further accelerate growth and integration, to capitalize on its
leading position in the marketplace and strengthen the Company’s
differentiated offerings. Exela now operates out of 23 countries
and the Company continues to invest in people and operations to be
closely aligned with its customers.
“We had a solid 2018 and achieved our revised
guidance for both revenue and Adjusted EBITDA. Our continued
investment in developing industry specific and departmental
solutions, as well as increased customer awareness, are showing
good results. Digital NowSM made the difference! In
2018, we achieved full-year revenue growth of approximately $130
million, and a 9% increase in revenue per FTE to $72,000. These
investments, and increased customer awareness have helped achieve a
growth rate of 14% in our Top 200 customers. With low customer
concentration and a high customer retention rate of 98%, our goal
for 2019 and beyond is to replicate the success that we had in our
Top 200 customers. We believe the large and growing addressable
market we operate in, provides us with substantial runway for
growth and expansion, with a focus on our existing customers.
We are also committed to sensibly pursuing growth while de-levering
our balance sheet over time.” said Ronald Cogburn, Chief Executive
Officer of Exela.
Financial information for 2018 contained in this
press release, unless otherwise stated, is presented on an as
reported basis in accordance with GAAP. Financial Information for
the full-year 2017 is presented pro forma for the business
combination of Quinpario Acquisition Corp. 2 (now Exela), SourceHOV
Holdings, Inc. (“SourceHOV”) and Novitex Holdings, Inc.
(“Novitex”), which closed on July 12, 2017 (the “Business
Combination”). The primary pro forma adjustment is to include the
results of Novitex for the period January 1, 2017 to June 30, 2017.
For more information, please refer to the reconciliation of
reported to pro forma financial results contained in the Schedules
to this press release.
Full Year 2018 Financial
Highlights
- Revenue: Revenue of $1.586 billion an increase
of 8.9% from $1.456 billion in 2017, on a pro forma basis. Revenue
for our Information and Transaction Processing Solutions (“ITPS”)
segment was $1.274 billion, an increase of 12.6% year-over-year,
driven primarily by growth in top customers, Digital NowSM model
due to faster ramp up of contracts, growth investments and
acquisitions offset by a decline in business with lower automation
and project driven business. Healthcare Solutions (“HS”) revenue
was $228.0 million, a decline of 2.4% year-over-year due to a
decline in volumes from a single customer who lost a contract from
one its customers, offset by a ramp up of new businesses, including
the most recent healthcare acquisition which will position the
segment for growth in 2019. Legal and Loss Prevention Services
(“LLPS”) revenue was $84.6 million. Results in LLPS are event
driven and were negatively impacted by projects that generated
lower revenue.
- Net Loss: Net Loss for 2018, was $162.5
million and represents an improvement of $79.9 million when
compared to a pro forma net loss of $242.4 million in 2017. 2018
net loss was driven by $95.8 million higher operating income that
was offset by an impairment charge of $48.1 million.
Excluding the impairment charge, the Company would have reported a
net loss of $114.4 million for 2018.
- Adjusted EBITDA: Adjusted EBITDA for the
full-year 2018 was $283.8 million, an increase of 15.7% from $245.2
million in 2017, on a pro forma basis. Adjusted EBITDA margin for
2018 was 17.9%, an increase of 110 basis points when compared to an
Adjusted EBITDA margin of 16.8% in 2017, on a pro forma basis. The
increase in 2018 Adjusted EBITDA and Adjusted EBITDA margin was
primarily driven by revenue growth, the Company’s cost savings
initiatives, and partially offset by investments the Company made
for growth.
- Common Stock: As of December 31, 2018,
there were 155,729,299 total shares of common stock outstanding
which includes 5,586,344 shares reserved for outstanding preferred
shares on an as-converted basis.
- Share buyback: During 2018, the Company
repurchased 2,499,885 shares of common stock. Cumulative shares
repurchased under the Company’s share buyback program total
2,549,185 since program inception.
- $100 million contract won in Q4 2018, went live January 1,
2019; customer increased tenure by 2 years increasing its TCV to
~$165 million.
- Launching SmartOfficeSM for growth in the front office
automation offerings.
- ~9%(3) increase in revenue per FTE to $72,000, result of Exela
technology driving automation. The increase in revenue per FTE is
even higher, at 11% or $73,000, when contributions from
acquisitions are excluded.
- ~$130 million in total 2018 revenue growth with 51 net
additional FTEs.
- Americas split (Revenue / Headcount) 85% / 46% - Growth in
revenue mainly driven by automation leading to a headcount decline
yoy.
- EU split (Revenue / Headcount) 13% / 13% - Growth in revenue
mainly driven by acquisition, far outpacing the headcount addition
by over 6x.
- Rest of World split (Revenue / Headcount) 2% / 14% - Modest
growth in headcount enabling global delivery and “right-shoring”
model.
- Low customer concentration with top 100 customers, comprising
61% of revenue out of over 4,000 customers.
- 55% growth in revenue in Europe during 2018.
- Customer retention rate 98%.
- Increase to 10 customers with over $25 million in annual
revenue, up from 6 customers in December 2017.
- Increase to 259 customers with over $1 million in annual
revenue, up from 197 in December 2017.
- Growth in revenue of 14% from top 200 customers, 12% growth
excluding acquisitions.
- 2018 investment in business development and customer awareness
showing visible results.
Fourth Quarter Ended December 31, 2018
Financial Highlights
- Revenue: Revenue of $399.6 million, an
increase of 3.4% from $386.3 million in the fourth quarter of 2017.
Revenue for our ITPS segment was $324.3 million, an increase of
7.6% year-over-year, driven primarily by growth in top customers,
Digital NowSM model due to faster ramp up of contracts, growth
investments and acquisitions offset by a decline in business with
lower automation and project driven business. HS revenue was $56.3
million, a decline of 6.3% year-over-year mainly due to a decline
in volumes from a single customer who lost a contract from one its
customers, offset by a ramp up of new businesses, including the
most recent healthcare acquisition which will position the segment
for growth in 2019. LLPS revenue was $19.1 million. Results in LLPS
are event driven and were negatively impacted by projects that
generated lower revenue.
- Net Loss: Net Loss for the fourth quarter of
2018 was $84.4 million, compared to a net loss of $58.7 million in
the fourth quarter of 2017. Fourth quarter 2018 net loss was driven
by $12.0 million higher operating income that was offset by an
impairment charge of $48.1 million. Excluding the impairment
charge, the Company would have reported a net loss of $36.3 million
for the fourth quarter of 2018.
- Adjusted EBITDA: Adjusted
EBITDA for the fourth quarter of 2018 was $75.3 million an increase
of 20.0% when compared to Adjusted EBITDA of $62.7 million in the
fourth quarter of 2017. Adjusted EBITDA margin for the fourth
quarter of 2018 was 18.8%, an increase of 260 basis points when
compared to an Adjusted EBITDA margin of 16.2% in the fourth
quarter of 2017. The increase in fourth quarter 2018 Adjusted
EBITDA and Adjusted EBITDA margin was primarily driven by revenue
growth, the Company’s cost savings initiatives, and partially
offset by investments the Company made for growth.
- Capital Expenditures: Capital expenditures for
the fourth quarter of 2018 was 3.1% of revenue compared to 2.9% on
a year over year basis.
Balance Sheet and Liquidity
- At December 31, 2018, Exela’s total liquidity was $116(4)
million, measured as $44 million of cash, and an undrawn revolving
credit facility of $100 million with $20.6 million reserved for
letters of credit. Total net debt was $1.402 billion.
2019 guidance
- Revenue range $1.66 billion to $1.70 billion, growth of
approximately 5% - 7% year over year.
- Adjusted EBITDA range $305 million to $335 million, growth of
approximately 7% - 18% year over year.
- Capital expenditures range (as % of revenue) of 2% - 2.5%.
- Capital Allocation to be prioritized towards debt
pre-payment.
- Reduction of net leverage ratio by 5% - 7%.
Note: Guidance is based on
constant-currency.
Note on Outlook: The Company
has not forecasted net income/(loss) on a forward-looking basis due
to the high variability and difficulty in predicting certain items
that affect GAAP net income/(loss). Adjusted EBITDA should not be
used to predict net income/(loss) as the difference between the two
measures is variable.
The above guidance is based on 2018 results.
Please refer to attached schedules for
reconciliations. Due to rounding, numbers presented throughout this
document may not add up precisely to the totals provided and
percentages may not precisely reflect absolute figures.
(1) – EBITDA is a non-GAAP measure. A
reconciliation of EBITDA is attached to this release.(2) – Adjusted
EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA
is attached to this release. (3) – Presented on a pro forma basis
with acquisitions for the TTM period.(4) – Total liquidity of $116
million excludes $7.7 million of restricted cash subject to legal
restrictions.
Filing of Form 12b-25
We intend to file a Form 12b-25 Notification of
Late Filing with the U.S. Securities and Exchange Commission,
because we will be filling our Annual Report on Form 10-K for
fiscal year ending 2018 after today’s deadline. The filing of
the Form 12b-25 grants an automatic 15-day extension for the filing
of our Annual Report. We are postponing the filing because we
experienced an unanticipated delay in compiling certain requested
accounting information relating to one of our tuck in acquisitions
we completed during 2018. This business is not material to
our results. We anticipate filing our Form 10-K prior to the
expiration of the 15 day extension period. Based on its review of
the Company’s disclosure controls and procedures, the Company’s
management expect to conclude that the Company’s disclosure
controls and procedures were not effective. Notwithstanding such
weaknesses, the Company’s management expects to conclude that the
consolidated financial statements to be included in the Form 10-K
will present fairly, in all material respects, the Company’s
financial position, results of operations and cash flows for the
periods to be presented in the Form 10-K, in conformity with
GAAP.
Earnings Conference Call and Audio Webcast
Exela will host a conference call to discuss its
fourth quarter and full year 2018 financial results today at 5:00
p.m. ET. To access this call, dial 833-255-2831 or
+412-902-6724 (international). A replay of this conference
call will be available through March 25, 2019 at 877-344-7529 or
+412-317-0088 (international). The replay passcode is
10127041. A live webcast of this conference call will be
available on the “Investors” page of the Company’s website
(www.exelatech.com). A supplemental slide presentation that
accompanies this call and webcast can be found on the investor
relations website (http://investors.exelatech.com/) and will remain
available after the call. Exela has also posted additional
historical financial information regarding SourceHOV and on a
combined basis to its investor relations website,
(http://investors.exelatech.com).
About Exela Exela Technologies,
Inc. (“Exela”) is a location-agnostic global business process
automation ("BPA") leader combining industry-specific and
multi-industry enterprise software and solutions with decades of
experience. Our BPA suite of solutions are deployed in banking,
healthcare, insurance and other industries to support mission
critical environments. Exela is a leader in work flow automation,
attended and un-attended cognitive automation, digital mail rooms,
print communications, and payment processing with deployments
across the globe. Exela partners with customers to improve user
experience and quality through operational efficiency. Exela serves
over 4,000 customers worldwide, through a secure, cloud-enabled
global delivery model. We are 22,000 employees strong across the
Americas, Europe and Asia. Our customer list includes 60% of the
Fortune® 100, along with many of the world’s largest retail chains,
banks, law firms, healthcare insurance payers and providers and
telecom companies. Find out more at www.exelatech.com
Follow Exela on
Twitter: https://twitter.com/exelatechFollow
Exela on
LinkedIn: https://www.linkedin.com/company/11174620/
Preliminary ResultsThe financial results
discussed herein are presented on a preliminary basis; final data
will be included in Exela’s Annual Report on Form 10-K for the
period ended December 31, 2018.
About Non-GAAP Financial
Measures: This press release includes EBITDA and Adjusted
EBITDA, each of which is a financial measure that is not prepared
in accordance with U.S. generally accepted accounting principles
(“GAAP”). Exela believes that the presentation of these non-GAAP
financial measures will provide useful information to investors in
assessing our financial performance, results of operations and
liquidity and allows investors to better understand the trends in
our business and to better understand and compare our results.
Exela’s board of directors and management use EBITDA and Adjusted
EBITDA to assess Exela’s financial performance, because it allows
them to compare Exela’s operating performance on a consistent basis
across periods by removing the effects of Exela’s capital structure
(such as varying levels of debt and interest expense, as well as
transaction costs resulting from the Business Combination and other
such capital markets based activities. Adjusted EBITDA also seeks
to remove the effects of integration and related costs to
achieve the savings, any expected reduction in operating expenses
due to the Business Combination, asset base (such as depreciation
and amortization) and other similar non-routine items outside the
control of our management team. Exela does not consider these
non-GAAP measures in isolation or as an alternative to liquidity or
financial measures determined in accordance with GAAP. A limitation
of these non-GAAP financial measures is that they exclude
significant expenses and income that are required by GAAP to be
recorded in Exela’s financial statements. In addition, they are
subject to inherent limitations as they reflect the exercise of
judgments by management about which expenses and income are
excluded or included in determining these non-GAAP financial
measures and therefore the basis of presentation for these measures
may not be comparable to similarly-titled measures used by other
companies. These non-GAAP financial measures are not required to be
uniformly applied, are not audited and should not be considered in
isolation or as substitutes for results prepared in accordance with
GAAP. Net loss is the GAAP measure most directly comparable to the
non-GAAP measures presented here. For reconciliation of the
comparable GAAP measures to these non-GAAP financial measures, see
the schedules to this release. Optimization and restructuring
expenses and merger adjustments are primarily related to the
implementation of strategic actions and initiatives related to the
Business Combination. All of these costs are variable and dependent
upon the nature of the actions being implemented and can vary
significantly driven by business needs. Accordingly, due to that
significant variability, we exclude these charges since we do not
believe they truly reflect our past, current or future operating
performance.
Forward-Looking Statements:
Certain statements included in this press release are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under The Private Securities Litigation
Reform Act of 1995. Forward-looking statements generally are
accompanied by words such as “may”, “should”, “would”, “plan”,
“intend”, “anticipate”, “believe”, “estimate”, “predict”,
“potential”, “seem”, “seek”, “continue”, “future”, “will”,
“expect”, “outlook” or other similar words, phrases or expressions.
These forward-looking statements include statements regarding our
industry, future events, the estimated or anticipated future
results and benefits of the business combination of Quinpario
Acquisition Corp. 2 (now Exela), SourceHOV Holdings, Inc.,
(“SourceHOV”) and Novitex Holdings, Inc. (“Novitex”), which
formed Exela Technologies, Inc. (“Exela”), and closed on July 12,
2017 (including the related transactions, the “Business
Combination”), future opportunities for the combined company, and
other statements that are not historical facts. These statements
are based on the current expectations of Exela management and are
not predictions of actual performance. These statements are subject
to a number of risks and uncertainties regarding Exela’s business,
and actual results may differ materially. These risks and
uncertainties include, but are not limited to, changes in the
business environment in which Exela operates and general financial,
economic, regulatory and political conditions affecting the
industries in which Exela operates; changes in taxes, governmental
laws and regulations; competitive product and pricing activity or
failure to realize the anticipated benefits of the Business
Combination, including as a result of a delay or difficulty in
integrating the businesses of SourceHOV and Novitex or the
inability to realize the expected amount and timing of cost savings
and operating synergies of the Business Combination; and those
factors discussed under the heading “Risk Factors” in Exela’s most
recent Annual Report on Form-10-K filed with the Securities and
Exchange Commission (“SEC”). In addition, forward-looking
statements provide Exela’s expectations, plans or forecasts of
future events and views as of the date of this communication. Exela
anticipates that subsequent events and developments will cause
Exela’s assessments to change. These forward-looking statements
should not be relied upon as representing Exela’s assessments as of
any date subsequent to the date of this press release.
Contact: Jim MathiasE:
ir@exelatech.com W: investors.exelatech.com T: +1
972-821-5808
Exela Technologies, Inc. and
SubsidiariesConsolidated Balance Sheets
For the years ended December 31, 2018 and
2017(unaudited)(in thousands of United States dollars
except share and per share amounts)
|
|
December 31, |
|
|
2018 |
|
|
2017 |
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
25,615 |
|
|
$ |
39,000 |
|
Restricted cash |
|
|
18,239 |
|
|
|
42,489 |
|
Accounts receivable,
net of allowance for doubtful accounts of $4,359 and $3,725
respectively |
|
|
270,812 |
|
|
|
229,704 |
|
Inventories, net |
|
|
16,220 |
|
|
|
11,922 |
|
Prepaid expenses and
other current assets |
|
|
25,015 |
|
|
|
24,596 |
|
Total current
assets |
|
|
355,901 |
|
|
|
347,711 |
|
Property, plant and
equipment, net |
|
|
132,986 |
|
|
|
132,908 |
|
Goodwill |
|
|
708,258 |
|
|
|
747,325 |
|
Intangible assets,
net |
|
|
407,021 |
|
|
|
464,984 |
|
Deferred income tax
assets |
|
|
16,225 |
|
|
|
9,019 |
|
Other noncurrent
assets |
|
|
19,391 |
|
|
|
12,891 |
|
Total
assets |
|
$ |
1,639,782 |
|
|
$ |
1,714,838 |
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit) |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
99,853 |
|
|
$ |
81,263 |
|
Related party
payables |
|
|
7,735 |
|
|
|
14,445 |
|
Income tax payable |
|
|
1,996 |
|
|
|
3,612 |
|
Accrued
liabilities |
|
|
66,008 |
|
|
|
49,383 |
|
Accrued compensation
and benefits |
|
|
54,583 |
|
|
|
46,925 |
|
Accrued interest |
|
|
49,071 |
|
|
|
55,102 |
|
Customer deposits |
|
|
34,235 |
|
|
|
31,656 |
|
Deferred revenue |
|
|
16,504 |
|
|
|
12,709 |
|
Obligation for claim
payment |
|
|
56,002 |
|
|
|
42,489 |
|
Current portion of
capital lease obligations |
|
|
17,498 |
|
|
|
15,611 |
|
Current portion of
long-term debt |
|
|
29,237 |
|
|
|
20,565 |
|
Total current
liabilities |
|
|
432,722 |
|
|
|
373,760 |
|
Long-term debt, net of
current maturities |
|
|
1,306,423 |
|
|
|
1,276,094 |
|
Capital lease
obligations, net of current maturities |
|
|
26,738 |
|
|
|
25,958 |
|
Pension liability |
|
|
25,269 |
|
|
|
25,496 |
|
Deferred income tax
liabilities |
|
|
11,212 |
|
|
|
5,362 |
|
Long-term income tax
liability |
|
|
3,024 |
|
|
|
3,470 |
|
Other long-term
liabilities |
|
|
15,400 |
|
|
|
14,704 |
|
Total
liabilities |
|
|
1,820,788 |
|
|
|
1,724,844 |
|
Commitment and
Contingencies (Note 12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity (deficit) |
|
|
|
|
|
|
Common stock, par value
of $0.0001 per share; 1,600,000,000 shares authorized; 152,692,140
shares issued and 150,142,955 shares outstanding at December 31,
2018 and 150,578,451 shares issued and 150,529,151 outstanding at
December 31, 2017 |
|
|
15 |
|
|
|
15 |
|
Preferred stock, par
value of $0.0001 per share; 20,000,000 shares authorized; 4,569,233
shares issued and outstanding at December 31, 2018 and 6,194,233
shares issued or outstanding at December 31, 2017 |
|
|
1 |
|
|
|
1 |
|
Additional paid in
capital |
|
|
482,018 |
|
|
|
482,018 |
|
Less: common stock held
in treasury, at cost; 2,549,185 shares at December 31, 2018 and
49,300 shares at December 31, 2017 |
|
|
(10,342 |
) |
|
|
(249 |
) |
Equity-based
compensation |
|
|
41,731 |
|
|
|
34,085 |
|
Accumulated
deficit |
|
|
(678,563 |
) |
|
|
(514,628 |
) |
Accumulated other
comprehensive loss: |
|
|
|
|
|
|
Foreign currency
translation adjustment |
|
|
(6,565 |
) |
|
|
(194 |
) |
Unrealized pension
actuarial losses, net of tax |
|
|
(9,301 |
) |
|
|
(11,054 |
) |
Total accumulated other
comprehensive loss |
|
|
(15,866 |
) |
|
|
(11,248 |
) |
Total
stockholders’ deficit |
|
|
(181,006 |
) |
|
|
(10,006 |
) |
Total
liabilities and stockholders’ deficit |
|
$ |
1,639,782 |
|
|
$ |
1,714,838 |
|
|
|
|
|
|
|
|
|
Exela Technologies, Inc. and
SubsidiariesConsolidated Statements of Operations
for the Years ended December 31, 2018 and 2017 and
2016(unaudited)(in thousands of United States dollars
except share and per share amounts)
|
|
Year Ended
December 31, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
Revenue |
|
$ |
1,586,222 |
|
|
$ |
1,152,324 |
|
|
$ |
789,926 |
|
Cost of revenue
(exclusive of depreciation and amortization) |
|
|
1,209,874 |
|
|
|
829,143 |
|
|
|
519,121 |
|
Selling, general and
administrative expenses |
|
|
184,651 |
|
|
|
220,955 |
|
|
|
130,437 |
|
Depreciation and
amortization |
|
|
145,485 |
|
|
|
98,890 |
|
|
|
79,639 |
|
Impairment of goodwill
and other intangible assets |
|
|
48,127 |
|
|
|
69,437 |
|
|
|
— |
|
Related party
expense |
|
|
4,334 |
|
|
|
33,431 |
|
|
|
10,493 |
|
Operating
(loss) income |
|
|
(6,249 |
) |
|
|
(99,532 |
) |
|
|
50,236 |
|
Other expense
(income), net: |
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
153,095 |
|
|
|
128,489 |
|
|
|
109,414 |
|
Loss on
extinguishment of debt |
|
|
1,067 |
|
|
|
35,512 |
|
|
|
— |
|
Sundry
expense (income), net |
|
|
(3,271 |
) |
|
|
2,295 |
|
|
|
712 |
|
Other
income, net |
|
|
(3,030 |
) |
|
|
(1,297 |
) |
|
|
— |
|
Net loss before
income taxes |
|
|
(154,110 |
) |
|
|
(264,531 |
) |
|
|
(59,890 |
) |
Income
tax (expense) benefit |
|
|
(8,407 |
) |
|
|
60,246 |
|
|
|
11,787 |
|
Net
loss |
|
$ |
(162,517 |
) |
|
$ |
(204,285 |
) |
|
$ |
(48,103 |
) |
Dividend
equivalent on Series A Preferred Stock related to beneficial
conversion feature |
|
|
- |
|
|
|
(16,375 |
) |
|
|
— |
|
Cumulative dividends for Series A Preferred Stock |
|
|
(3,655 |
) |
|
|
(2,489 |
) |
|
|
— |
|
Net loss
attributable to common stockholders |
|
$ |
(166,172 |
) |
|
$ |
(223,149 |
) |
|
$ |
(48,103 |
) |
Loss per
share: |
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(1.09 |
) |
|
$ |
(2.08 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exela Technologies, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows For the Years ended December 31, 2018
and 2017 and 2016(unaudited)(in thousands of United States
dollars unless otherwise stated)
|
|
Years ended
December 31, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(162,517 |
) |
|
$ |
(204,285 |
) |
|
$ |
(48,103 |
) |
Adjustments to
reconcile net loss |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
145,485 |
|
|
|
98,890 |
|
|
|
79,639 |
|
Fees paid in stock |
|
|
- |
|
|
|
23,875 |
|
|
|
— |
|
HGM contract
termination fee paid in stock |
|
|
- |
|
|
|
10,000 |
|
|
|
— |
|
Original issue discount
and debt issuance cost amortization |
|
|
10,913 |
|
|
|
12,280 |
|
|
|
13,684 |
|
Impairment of goodwill
and other intangible assets |
|
|
48,127 |
|
|
|
69,437 |
|
|
|
— |
|
Provision for doubtful
accounts |
|
|
2,767 |
|
|
|
500 |
|
|
|
756 |
|
Deferred income tax
provision (benefit) |
|
|
3,352 |
|
|
|
(66,723 |
) |
|
|
(15,729 |
) |
Share-based
compensation expense |
|
|
7,647 |
|
|
|
6,743 |
|
|
|
7,086 |
|
Foreign currency
remeasurement |
|
|
(1,180 |
) |
|
|
1,382 |
|
|
|
193 |
|
Loss on sale of
assets |
|
|
2,095 |
|
|
|
399 |
|
|
|
2,245 |
|
Fair value adjustment
for interest rate swap |
|
|
(2,540 |
) |
|
|
(1,297 |
) |
|
|
— |
|
Change in operating
assets and liabilities, net of effect from acquisitions |
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(19,319 |
) |
|
|
(4,832 |
) |
|
|
20,801 |
|
Prepaid
expenses and other assets |
|
|
(2,820 |
) |
|
|
2,628 |
|
|
|
4,969 |
|
Accounts
payable and accrued liabilities |
|
|
5,157 |
|
|
|
69,551 |
|
|
|
9,033 |
|
Related
party payables |
|
|
(6,710 |
) |
|
|
4,907 |
|
|
|
(2,427 |
) |
Net cash provided by operating activities |
|
|
30,457 |
|
|
|
23,455 |
|
|
|
72,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property,
plant and equipment |
|
|
(20,072 |
) |
|
|
(14,440 |
) |
|
|
(7,926 |
) |
Additions to internally
developed software |
|
|
(7,438 |
) |
|
|
(7,843 |
) |
|
|
(13,017 |
) |
Additions to
outsourcing contract costs |
|
|
(7,552 |
) |
|
|
(10,992 |
) |
|
|
(14,636 |
) |
Cash acquired in
TransCentra acquisition |
|
|
- |
|
|
|
— |
|
|
|
3,351 |
|
Proceeds from sale of
Assets |
|
|
3,568 |
|
|
|
4,607 |
|
|
|
626 |
|
Cash acquired in
Quinpario reverse merger |
|
|
- |
|
|
|
91 |
|
|
|
— |
|
Cash paid in
acquisition, net of cash received |
|
|
(34,810 |
) |
|
|
(423,797 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(66,304 |
) |
|
|
(452,374 |
) |
|
|
(31,602 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Change in bank
overdraft |
|
|
- |
|
|
|
(210 |
) |
|
|
(1,331 |
) |
Loss on extinguishment
of debt |
|
|
1,067 |
|
|
|
35,512 |
|
|
|
— |
|
Proceeds from issuance
of stock |
|
|
- |
|
|
|
204,417 |
|
|
|
— |
|
Cash received from
Quinpario |
|
|
- |
|
|
|
27,031 |
|
|
|
— |
|
Repurchase of Common
Stock |
|
|
(7,221 |
) |
|
|
(249 |
) |
|
|
— |
|
Proceeds from financing
obligation |
|
|
11,557 |
|
|
|
3,116 |
|
|
|
5,429 |
|
Contribution from
Shareholders |
|
|
- |
|
|
|
20,548 |
|
|
|
— |
|
Proceeds from new
credit facility |
|
|
30,000 |
|
|
|
1,320,500 |
|
|
|
— |
|
Retirement of previous
credit facilities |
|
|
- |
|
|
|
(1,055,736 |
) |
|
|
— |
|
Cash paid for debt
issuance costs |
|
|
(1,094 |
) |
|
|
(39,837 |
) |
|
|
— |
|
Cash paid for equity
issue costs |
|
|
(7,500 |
) |
|
|
(149 |
) |
|
|
— |
|
Borrowings from
revolver and swing-line loan |
|
|
30,000 |
|
|
|
72,600 |
|
|
|
53,700 |
|
Repayments from
revolver and swing line loan |
|
|
(30,000 |
) |
|
|
(72,500 |
) |
|
|
(53,200 |
) |
Principal payments on
long-term obligations |
|
|
(28,719 |
) |
|
|
(39,316 |
) |
|
|
(47,853 |
) |
Net cash provided by (used in) financing
activities |
|
|
(1,910 |
) |
|
|
475,727 |
|
|
|
(43,255 |
) |
Effect of exchange
rates on cash |
|
|
122 |
|
|
|
429 |
|
|
|
(2,059 |
) |
Net increase (decrease) in cash and cash
equivalents |
|
|
(37,635 |
) |
|
|
47,237 |
|
|
|
(4,769 |
) |
Cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
Beginning of
period |
|
|
81,489 |
|
|
|
34,252 |
|
|
|
39,021 |
|
End of period |
|
$ |
43,854 |
|
|
$ |
81,489 |
|
|
$ |
34,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow data: |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax payments,
net of refunds received |
|
$ |
7,827 |
|
|
$ |
5,711 |
|
|
$ |
3,771 |
|
Interest paid |
|
|
146,076 |
|
|
|
69,622 |
|
|
|
96,166 |
|
Noncash
investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Assets acquired through
capital lease arrangements |
|
|
14,920 |
|
|
|
6,973 |
|
|
|
11,925 |
|
Leasehold improvements
funded by lessor |
|
|
1,565 |
|
|
|
146 |
|
|
|
5,186 |
|
Issuance of common
stock as consideration for Novitex |
|
|
- |
|
|
|
244,800 |
|
|
|
— |
|
Accrued capital
expenditures |
|
|
2,820 |
|
|
|
1,621 |
|
|
|
580 |
|
Dividend equivalent on Series A Preferred Stock |
|
|
- |
|
|
|
16,375 |
|
|
|
— |
|
Liability assumed of
Quinpario |
|
|
- |
|
|
|
4,672 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exela
TechnologiesSchedule 1: Fourth Quarter 2017 vs.
Fourth Quarter 2018 Financial Performance(unaudited)
$ in millions |
Q4'17 |
Q4'18 |
|
Change ($) |
Information
and Transaction Processing Solutions |
301.5 |
|
324.3 |
|
|
22.8 |
|
Healthcare
Solutions |
60.1 |
|
56.3 |
|
|
(3.8 |
) |
Legal and
Loss Prevention Services |
24.7 |
|
19.1 |
|
|
(5.6 |
) |
Total
Revenue |
386.3 |
|
399.6 |
|
|
13.4 |
|
% change |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue (exclusive of depreciation and amortization) |
289.9 |
|
306.2 |
|
|
16.3 |
|
Gross
profit |
96.4 |
|
93.5 |
|
|
(2.9 |
) |
% change |
|
|
-3.0 |
% |
|
|
|
as
a % of revenue |
25.0 |
% |
23.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
SG&A |
48.3 |
|
47.4 |
|
|
(0.9 |
) |
Depreciation and amortization |
28.1 |
|
36.1 |
|
|
7.9 |
|
Impairment
of goodwill and other intangible assets |
69.4 |
|
48.1 |
|
|
(21.3 |
) |
Related
party expense |
1.7 |
|
1.1 |
|
|
(0.6 |
) |
Operating (loss)
income |
(51.2 |
) |
(39.2 |
) |
|
12.0 |
|
as
a % of revenue |
-13.3 |
% |
-9.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
36.7 |
|
38.2 |
|
|
1.5 |
|
Loss on
extinguishment of debt |
- |
|
- |
|
|
- |
|
Sundry
expense (income) & Other income, net |
(2.0 |
) |
3.5 |
|
|
5.4 |
|
Net loss before income
taxes |
(86.0 |
) |
(80.9 |
) |
|
5.1 |
|
Income tax
expense (benefit) |
(27.3 |
) |
3.5 |
|
|
30.8 |
|
Net income
(loss) |
(58.7 |
) |
(84.4 |
) |
|
(25.7 |
) |
as
a % of revenue |
-15.2 |
% |
-21.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
28.1 |
|
36.1 |
|
|
7.9 |
|
Interest
expense, net |
36.7 |
|
38.2 |
|
|
1.5 |
|
Income tax
expense (benefit) |
(27.3 |
) |
3.5 |
|
|
30.8 |
|
EBITDA |
(21.1 |
) |
(6.6 |
) |
|
14.5 |
|
as
a % of revenue |
-5.5 |
% |
-1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Adjustments |
|
|
|
|
|
|
|
1 |
Transaction and
integration costs |
2.4 |
|
2.0 |
|
|
(0.3 |
) |
2 |
Optimization and
restructuring expenses |
11.0 |
|
21.2 |
|
|
10.2 |
|
3 |
Gain / loss on
derivative instruments |
(1.3 |
) |
2.9 |
|
|
4.2 |
|
4 |
Other
Charges |
71.8 |
|
55.8 |
|
|
(16.0 |
) |
Adjusted
EBITDA |
62.7 |
|
75.3 |
|
|
12.6 |
|
% change |
|
|
20.0 |
% |
|
|
|
as
a % of revenue |
16.2 |
% |
18.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Exela Technologies
Schedule 2: Pro Forma 2017(1) vs. 2018 Financial
Performance(unaudited)
$ in millions |
|
FY17 |
FY18 |
|
Change ($) |
Information
and Transaction Processing Solutions |
|
1,131.0 |
|
1,273.6 |
|
|
142.6 |
|
Healthcare
Solutions |
|
233.6 |
|
228.0 |
|
|
(5.6 |
) |
Legal and
Loss Prevention Services |
|
91.6 |
|
84.6 |
|
|
(7.1 |
) |
Total
Revenue |
|
1,456.3 |
|
1,586.2 |
|
|
129.9 |
|
% change |
|
|
8.9 |
% |
|
|
|
|
|
|
|
|
|
Cost of
revenue (exclusive of depreciation and amortization) |
|
1,079.9 |
|
1,209.9 |
|
|
130.0 |
|
Gross
profit |
|
376.4 |
|
376.3 |
|
|
(0.0 |
) |
% change |
|
|
0.0 |
% |
|
|
as
a % of revenue |
|
25.8 |
% |
23.7 |
% |
|
|
|
|
|
|
|
|
|
SG&A |
|
255.8 |
|
184.7 |
|
|
(71.1 |
) |
Depreciation and amortization |
|
119.5 |
|
145.5 |
|
|
26.0 |
|
Impairment
of goodwill and other intangible assets |
|
69.4 |
|
48.1 |
|
|
(21.3 |
) |
Related
party expense |
|
33.7 |
|
4.3 |
|
|
(29.4 |
) |
Operating (loss)
income |
|
(102.1 |
) |
(6.2 |
) |
|
95.8 |
|
as
a % of revenue |
|
-7.0 |
% |
-0.4 |
% |
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
153.4 |
|
153.1 |
|
|
(0.3 |
) |
Loss on
extinguishment of debt |
|
53.0 |
|
1.1 |
|
|
(51.9 |
) |
Sundry
expense (income) & Other income, net |
|
1.1 |
|
(6.3 |
) |
|
(7.4 |
) |
Net loss before income
taxes |
|
(309.6 |
) |
(154.1 |
) |
|
155.5 |
|
Income tax
expense (benefit) |
|
(67.2 |
) |
8.4 |
|
|
75.6 |
|
Net income
(loss) |
|
(242.4 |
) |
(162.5 |
) |
|
79.9 |
|
as
a % of revenue |
|
-16.6 |
% |
-10.2 |
% |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
119.5 |
|
145.5 |
|
|
26.0 |
|
Interest
expense, net |
|
153.4 |
|
153.1 |
|
|
(0.3 |
) |
Income tax
expense (benefit) |
|
(67.2 |
) |
8.4 |
|
|
75.6 |
|
EBITDA |
|
(36.7 |
) |
144.5 |
|
|
181.1 |
|
as
a % of revenue |
|
-2.5 |
% |
9.1 |
% |
|
|
|
|
|
|
|
|
|
EBITDA Adjustments |
|
|
|
|
|
1 |
Transaction and
integration costs |
|
99.0 |
|
4.1 |
|
|
(94.8 |
) |
2 |
Optimization and
restructuring expenses |
|
47.9 |
|
68.2 |
|
|
20.3 |
|
3 |
Gain / loss on
derivative instruments |
|
(1.3 |
) |
(1.9 |
) |
|
(0.6 |
) |
4 |
Other
Charges |
|
136.3 |
|
69.0 |
|
|
(67.3 |
) |
Adjusted
EBITDA |
|
245.2 |
|
283.8 |
|
|
38.6 |
|
% change |
|
|
15.7 |
% |
|
|
as
a % of revenue |
|
16.8 |
% |
17.9 |
% |
|
|
|
|
|
|
|
|
|
(1) Net loss for the period is presented on the basis of the
previous debt structure of the respective standalone companies that
became Exela as a result of the Business Combination. As of July
12th, 2017 those debt structures were replaced with new debt
consisting of $350 million Term Loan and $1.0 billion Senior
Secured Notes.
Exela
TechnologiesSchedule 3: 2017 Adjusted EBITDA
Reconciliation
|
|
FY2017(1) |
$ in millions |
|
As Reported |
|
Novitex |
|
Pro Forma |
Revenue |
|
$ |
1,152.3 |
|
|
$ |
304.0 |
|
|
$ |
1,456.3 |
|
Cost of revenue
(exclusive of depreciation and amortization) |
|
|
829.1 |
|
|
|
250.8 |
|
|
|
1,079.9 |
|
Selling, general and
administrative expenses (Including related party) |
|
|
254.4 |
|
|
|
35.1 |
|
|
|
289.5 |
|
Depreciation and
amortization |
|
|
98.9 |
|
|
|
20.6 |
|
|
|
119.5 |
|
Impairment of goodwill
and other intangible assets |
|
|
69.4 |
|
|
|
0.0 |
|
|
|
69.4 |
|
Operating
income (loss) |
|
|
(99.5 |
) |
|
|
(2.5 |
) |
|
|
(102.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net |
|
|
128.5 |
|
|
|
24.9 |
|
|
|
153.4 |
|
Loss / (Gain) on
extinguishment of debt |
|
|
35.5 |
|
|
|
17.5 |
|
|
|
53.0 |
|
Sundry expense &
other income, net |
|
|
1.0 |
|
|
|
0.0 |
|
|
|
1.1 |
|
Net loss before
income taxes |
|
|
(264.5 |
) |
|
|
(45.0 |
) |
|
|
(309.6 |
) |
Income tax (benefit)
expense |
|
|
(60.2 |
) |
|
|
(6.9 |
) |
|
|
(67.2 |
) |
Net
loss |
|
$ |
(204.3 |
) |
|
$ |
(38.0 |
) |
|
$ |
(242.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxes |
|
|
(60.2 |
) |
|
|
(6.9 |
) |
|
|
(67.2 |
) |
Interest expense |
|
|
128.5 |
|
|
|
24.9 |
|
|
|
153.4 |
|
Depreciation and
amortization |
|
|
98.9 |
|
|
|
20.6 |
|
|
|
119.5 |
|
EBITDA |
|
$ |
(37.2 |
) |
|
$ |
0.6 |
|
|
$ |
(36.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction related
costs |
|
|
88.9 |
|
|
|
10.0 |
|
|
|
99.0 |
|
Optimization and
restructuring expenses |
|
|
42.5 |
|
|
|
5.4 |
|
|
|
47.9 |
|
(Gain) / loss on
derivative instruments |
|
|
(1.3 |
) |
|
|
0.0 |
|
|
|
(1.3 |
) |
Other Charges |
|
|
115.8 |
|
|
|
20.5 |
|
|
|
136.3 |
|
Adjusted
EBITDA |
|
$ |
208.8 |
|
|
$ |
36.5 |
|
|
$ |
245.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net loss for the period is presented on the
basis of the previous debt structure of the respective standalone
companies that became Exela as a result of the Business
Combination. As of July 12th, 2017 those debt structures were
replaced with new debt consisting of $350 million Term Loan and
$1.0 billion Senior Secured Notes.
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