Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA),
a location-agnostic global business process automation (“BPA”)
leader across numerous industries, announced today that it has
filed its Annual Report on Form 10-K for the year ended December
31, 2019, including the previously announced restatement of prior
period results for 2017, 2018 and the nine months ended September
30, 2019. The Form 10-K also includes relevant quarterly financial
information for the years ended December 31, 2018 and 2019.
“We are pleased to have achieved our revised
full year 2019 guidance, including revenue above the high-end
of our guidance range,” said Ronald Cogburn, Chief Executive
Officer of Exela. “The COVID-19 pandemic has posed unprecedented
challenges and disruption for companies and communities around the
world. Our priorities since the onset of the pandemic have been the
health and safety of our global team members and their families,
and continuing to provide mission-critical services to our
customers. In this regard, with our strategic global footprint,
“right-shore” model, and 86% of our team members either enabled to
work remotely or less impacted by the pandemic, we have delivered
virtually uninterrupted service to our customers. I am incredibly
proud of all our global team members for their continued hard work
and dedication to serving our customers during this time.
Notwithstanding the current economic challenges of COVID-19, we
believe our business model remains resilient supported by our
strong customer base, the mission-critical nature of the services
we provide, our leading suite of services and solutions, and our
global delivery excellence.”
Mr. Cogburn continued, “Looking to the remainder
of 2020 and beyond, we have a plan in place for improved long-term
profitable growth and value creation. We will continue to position
the Company to focus on growing our base business in core
industries such as banking, insurance and healthcare where we
provide critical billing and payment solutions. In addition, our
strategic priorities include improving our operating income and
free cash flow, increasing our liquidity, and reducing our debt.
Our previously announced debt reduction and liquidity improvement
initiative is an important component of this plan. While we still
have work to do, we have made good progress so far in 2020 by
closing a new securitized AR facility in January and the
divestiture of our Tax Benefit Group business in March, increasing
our financial flexibility.”
COVID-19 PositioningIn response
to the COVID-19 pandemic, Exela rapidly initiated a plan to protect
the health and safety of its global team members, while continuing
to serve customers’ needs. Relevant highlights include:
- Favorable employee distribution model with over 60% of the
employee base located in Americas and EMEA offers Exela a clear
differentiation and edge over competitors
- Minimum volume commitments in many contracts limit the effects
of volume reductions
- Rapid response unit set up with an emphasis on solutions that
address work-from-home environments such as the Digital
Mailroom
- Company adjusted its FTE capacity in Q2 to 19,056 FTEs
representing 86% of its pre-COVID-19 levels of 22,058 FTEs
Fourth Quarter 2019 Financial
Highlights
- Revenue: Revenue was $393.6 million, a decline
of 1.5% from $399.6 million in the fourth quarter of 2018. Revenue
for the Information and Transaction Processing Solutions (“ITPS”)
segment was $306.7 million, a decline of 5.4% year-over-year,
driven primarily by the previously announced low margin contract
exit (“LMCE”) in the third quarter of 2018 partially offset by
growth from existing customers and new wins. Healthcare Solutions
(“HS”) revenue was $69.8 million, an increase of 24.0%
year-over-year, driven primarily by acquisition, new customer
growth and increased volumes with existing customers. Legal and
Loss Prevention Services (“LLPS”) revenue was $17.1 million, a
decline of approximately $2.0 million, or 10.3% from the fourth
quarter of 2018.Revenue excluding the previously announced LMCE and
pass through revenues from postage and postage handling with either
zero or nominal margins (“pass through revenue”)
(4) was $323.5 million in the fourth quarter
of 2019, representing an increase of 1.5% over $318.8 million in
the fourth quarter of 2018. 82% of fourth quarter 2019 revenue was
in the Americas, 16% was in Europe, and 2% was in rest of
world.
- Operating income / (loss): Operating loss for
the fourth quarter of 2019 was $249.5 million, compared with
operating loss of $40.6 million in the fourth quarter of 2018. The
year-over-year increase in operating loss is primarily attributable
to non-cash goodwill and trade-name impairment charges of $252.4
million recognized in the fourth quarter of 2019, compared with
$48.1 million of impairment charges in the fourth quarter of 2018,
along with higher SG&A expenses partially offset by lower
depreciation and amortization costs. The non-cash goodwill
and trade-name impairment charges incurred in the fourth quarter of
2019 were related to the write-down of the carrying values of the
ITPS and LLPS segments.
- Net Loss: Net Loss for the fourth quarter of
2019 was $304.1 million, compared with a net loss of $86.5 million
in the fourth quarter of 2018.
- Adjusted EBITDA: Adjusted
EBITDA for the fourth quarter of 2019 was $53.0 million, compared
to Adjusted EBITDA of $72.7 million in the fourth quarter of 2018.
Adjusted EBITDA margin for the fourth quarter of 2019 was 13.5%
compared to Adjusted EBITDA margin of 18.2% in the fourth quarter
of 2018. The decrease in fourth quarter 2019 Adjusted EBITDA was
mainly driven by lower revenue in the ITPS segment, higher SG&A
spend, and losses on derivative instruments, partially offset by
continued realization of savings flow-through.Adjusted EBITDA
margin, based on revenue excluding LMCE and pass through revenue,
was 16.4% in the fourth quarter of 2019, compared with 22.8% in the
fourth quarter of 2018.
- Capital Expenditures: Capital expenditures for
the fourth quarter of 2019 were 1.2% of revenue compared to 2.6% of
revenue in the fourth quarter of 2018.
- Common Stock: As of May 1, 2020, there were
147,511,430 total shares of common stock outstanding and an
additional 3,923,385 shares of common stock reserved for issuance
for our outstanding preferred shares on an as-converted basis.
- Total employees as of December 31, 2019 were 22,766 as compared
to 22,715 as of September 30, 2019.
Full-Year 2019 Financial
Highlights
- Revenue: Revenue was $1,562.3 million, a
decline of 1.5% from $1,586.2 million in 2018. Revenue for the ITPS
segment was $1,234.3 million, a decline of 3.1% year-over-year,
driven primarily by the previously announced LMCE and adverse
currency impacts, partially offset by revenue from acquisitions
completed in 2018. HS revenue was $256.7 million, an increase of
12.6% year-over-year, driven primarily by acquisition, new customer
growth and increased volume with existing customers. LLPS revenue
was $71.3 million, representing a decline of 15.6% from 2018.
Results in LLPS are event driven and were impacted primarily by
lower revenue from legal claims administration services in
2019.Revenue excluding the previously announced LMCE and pass
through revenue was $1,284.9 million in 2019, representing an
increase of 2.9% over $1,248.1 million in 2018.
Excluding
the impact of LMCE and certain other customer exits, full-year 2019
revenue from top-20 customers increased 13% year-over-year, and
revenue from top-50 customers increased 11% year-over-year,
reflecting the Company’s focus on expanding with its largest
customers.
82.3%
of full-year 2019 revenue was in the Americas, 16.0% was in Europe
and 1.7% was in rest of
world.
- Operating income / (loss): Operating loss in
2019 was $321.2 million, compared with a loss of $10.7 million in
2018. The year-over-year increase in operating loss was primarily
driven by non-cash goodwill and trade-name impairment charges of
$349.6 million recognized in 2019, compared with $48.1 million of
non-cash impairment charges recognized in 2018, as well as lower
revenue and higher SG&A expenses, which were partially offset
by lower depreciation and amortization costs. The non-cash goodwill
and trade-name impairment charges incurred in 2019 were related to
the write-down of the carrying values of the ITPS and LLPS
segments.
- Net Loss: Net Loss for 2019 was $509.1
million, compared with a net loss of $169.8 million in 2018.
- Adjusted EBITDA: Adjusted
EBITDA in 2019 was $254.8 million, as compared to Adjusted EBITDA
of $276.2 million in 2018. Adjusted EBITDA margin for 2019 was
16.3% compared to Adjusted EBITDA margin of 17.4% in 2018. The
decrease in 2019 Adjusted EBITDA was mainly driven by lower revenue
in the ITPS and LLPS segments and higher SG&A spend, partially
offset by continued realization of savings flow-through.Adjusted
EBITDA margin, based on revenue excluding LMCE and pass through
revenue, was 19.8% in 2019, compared with 22.1% in 2018.
- Capital Expenditures: Capital expenditures for
2019 were 1.3% of revenue compared to 1.7% of revenue in 2018.
Balance Sheet: At December 31,
2019, Exela’s total net debt was $1.509 billion.
Debt Reduction and Liquidity
ImprovementOn November 12, 2019, Exela announced that its
Board of Directors adopted a debt reduction and liquidity
improvement initiative (“Initiative”), with the goal of increasing
the Company’s liquidity to approximately $125.0 to $150.0 million,
and repaying debt with a target debt reduction of approximately
$150.0 to $200.0 million. In accordance with this Initiative, Exela
announced two transactions in the first quarter of 2020.
- On January 15, 2020, Exela announced that it entered into a
5-year, $160.0 million accounts receivable securitization facility
to improve liquidity. The facility is for an initial
five-year term, may be extended in accordance with its terms, and
is incremental to Exela’s existing $100.0 million revolving
facility maturing in July 2022.
- On March 17, 2020, Exela announced the sale of its Tax Benefit
Group (“TBG”) business for $40.0 million, or approximately 1.93x
2019 revenue. Net of closing costs and adjustments, this
transaction resulted in proceeds of $38.2 million. For full year
2019, TBG generated total revenue of $20.7 million. The Company
believes it is on schedule for additional divestitures with
expected proceeds in the range of $110.0 million to $160.0
million.
First Quarter 2020 Update and Full Year
2020 Commentary
- As previously disclosed, the Company expects to complete its
financial statements for the quarter ended March 31, 2020 by June
24, 2020. For the first quarter of 2020, Exela expects to report
revenue in the range of $362.0 - $365.0 million. Although Exela is
working diligently to complete its financial statements for the
first quarter of 2020 by June 24, 2020 no assurance can be given
that they will be filed within such period.
- The depth and duration of the economic impact from COVID-19 on
Exela and its customers’ businesses remains unknown. Given the
uncertainties surrounding COVID-19 and its impacts on visibility,
Exela is delaying providing financial guidance for full year
2020.
(1) – Constant currency is a non-GAAP measure. A
reconciliation of constant currency is attached to this release.(2)
– EBITDA is a non-GAAP measure. A reconciliation of EBITDA is
attached to this release.(3) – Adjusted EBITDA is a non-GAAP
measure. A reconciliation of Adjusted EBITDA is attached to this
release. (4) – Pass through revenue is defined as postage and
postage handling revenue with either zero or nominal margins.
LMCE is defined as revenue from the low margin contract exit
announced in the third quarter of 2018. A reconciliation of revenue
net of pass through revenue and LMCE is attached to this
release.
Earnings Conference Call and Audio
WebcastExela will host a conference call to discuss its
fourth quarter and year end 2019 financial results at 5 p.m. ET on
June 9, 2020. To access this call, dial 833-255-2831 or
+412-902-6724 (international). A replay of this conference
call will be available through June 16, 2020 at 877-344-7529 or
+412-317-0088 (international). The replay passcode is
10144972. 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.
About Exela Exela Technologies,
Inc. (“Exela”) is a business process automation (BPA) leader,
leveraging a global footprint and proprietary technology to provide
digital transformation solutions enhancing quality, productivity,
and end-user experience. With decades of expertise operating
mission-critical processes, Exela serves a growing roster of more
than 4,000 customers throughout 50 countries, including over 60% of
the Fortune® 100. With foundational technologies spanning
information management, workflow automation, and integrated
communications, Exela’s software and services include
multi-industry department solution suites addressing finance and
accounting, human capital management, and legal management, as well
as industry-specific solutions for banking, healthcare, insurance,
and public sectors. Through cloud-enabled platforms, built on a
configurable stack of automation modules, and over 22,000 employees
operating in 23 countries, Exela rapidly deploys integrated
technology and operations as an end-to-end digital journey partner.
Find out more at www.exelatech.com
Follow Exela on
Twitter: https://twitter.com/exelatechFollow
Exela on
LinkedIn: https://www.linkedin.com/company/11174620/
About Non-GAAP Financial
Measures: This press release includes constant currency,
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 constant currency, 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 combination of Quinpario
Acquisition Corp. 2, SourceHOV Holdings, Inc. and Novitex Holdings,
Inc. on July 12, 2017 (the “Novitex Business Combination”) and
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 Novitex Business Combination, asset base (such as
depreciation and amortization) and other similar non-routine items
outside the control of our management team. Optimization and
restructuring expenses and merger adjustments are primarily related
to the implementation of strategic actions and initiatives related
to the Novitex 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. The constant currency
presentation excludes the impact of fluctuations in foreign
currency exchange rates. We calculate constant currency revenue and
Adjusted EBITDA on a constant currency basis by converting our
current-period local currency financial results using the exchange
rates from the corresponding prior-period and compare these
adjusted amounts to our corresponding prior period reported
results. 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
attached to this release.
Restatement: As previously
disclosed in the Company’s Current Report on Form 8-K filed with
the SEC on March 17, 2020, the board of directors of the Company,
based on the recommendation of the audit committee and in
consultation with management, concluded that, because of errors
identified in the Company’s previously issued financial statements
for the fiscal years ended December 31, 2018 and 2017 and the first
three quarters of fiscal 2019, the Company would restate its
previously issued financial statements, including the quarterly
data for fiscal years 2019 and 2018 and its selected financial data
for the relevant periods. The adjustments made as a result of
the restatement are more fully discussed in Note
3, Restatement of Previously Issued Financial Statements,
of the Notes to Consolidated Financial Statements included in the
Company’s Annual Report on Form 10-K filed with the SEC on June 9,
2020. Previously filed annual reports on Form 10-K and
quarterly reports on Form 10-Q for the periods affected by
the restatement have not been amended. Accordingly,
investors should no longer rely upon the Company’s previously
released financial statements for these periods and any earnings
releases, investor presentations or other communications relating
to these periods, and, for these periods, investors should rely
solely on the financial statements and other financial data for the
relevant periods included in the above referenced Annual
Report. All amounts in this release affected by
the restatement adjustments reflect such amounts as
restated.
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 Novitex Business Combination, future
opportunities for the combined company, including potential
divestitures 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,
including without limitation those discussed under the heading
“Risk Factors” in Exela’s most recently filed Annual Report on
Form-10-K filed with the Securities and Exchange Commission. 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.
Exela Technologies, Inc. and
SubsidiariesConsolidated Balance Sheets
As of December 31, 2019 and December 31, 2018(in
thousands of United States dollars except share and per share
amounts)
|
December 31, |
|
|
|
2018 |
|
2019 |
|
(As Restated) |
Assets |
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
6,198 |
|
|
$ |
36,206 |
|
Restricted
cash |
|
7,901 |
|
|
|
7,648 |
|
Accounts
receivable, net of allowance for doubtful accounts of $4,975 and
$4,359, respectively |
|
261,400 |
|
|
|
270,812 |
|
Related
party receivables |
|
716 |
|
|
|
— |
|
Inventories,
net |
|
19,047 |
|
|
|
16,220 |
|
Prepaid
expenses and other current assets |
|
23,663 |
|
|
|
24,937 |
|
Total current assets |
|
318,925 |
|
|
|
355,823 |
|
Property,
plant and equipment, net of accumulated depreciation of $176,995
and $154,060, respectively |
|
113,637 |
|
|
|
132,986 |
|
Operating
lease right-of-use assets, net |
|
93,627 |
|
|
|
- |
|
Goodwill |
|
359,771 |
|
|
|
708,258 |
|
Intangible
assets, net |
|
342,443 |
|
|
|
395,020 |
|
Deferred
income tax assets |
|
12,032 |
|
|
|
16,345 |
|
Other
noncurrent assets |
|
17,889 |
|
|
|
19,391 |
|
Total assets |
$ |
1,258,324 |
|
|
$ |
1,627,823 |
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
(Deficit) |
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Accounts
payables |
$ |
86,167 |
|
|
$ |
99,853 |
|
Related
party payables |
|
1,740 |
|
|
|
15,363 |
|
Income tax
payable |
|
352 |
|
|
|
1,996 |
|
Accrued
liabilities |
|
121,553 |
|
|
|
107,355 |
|
Accrued
compensation and benefits |
|
48,574 |
|
|
|
52,211 |
|
Accrued
interest |
|
48,769 |
|
|
|
49,071 |
|
Customer
deposits |
|
27,765 |
|
|
|
34,235 |
|
Deferred
revenue |
|
16,282 |
|
|
|
16,504 |
|
Obligation
for claim payment |
|
39,156 |
|
|
|
56,002 |
|
Current
portion of finance lease liabilities |
|
13,788 |
|
|
|
17,498 |
|
Current
portion of operating lease liabilities |
|
25,345 |
|
|
|
- |
|
Current
portion of long-term debts |
|
36,490 |
|
|
|
29,237 |
|
Total current liabilities |
|
465,981 |
|
|
|
479,325 |
|
Long-term
debt, net of current maturities |
|
1,398,385 |
|
|
|
1,306,423 |
|
Finance
lease liabilities, net of current portion |
|
20,272 |
|
|
|
26,738 |
|
Pension
liabilities |
|
25,681 |
|
|
|
27,641 |
|
Deferred
income tax liabilities |
|
7,996 |
|
|
|
11,214 |
|
Long-term
income tax liabilities |
|
2,806 |
|
|
|
3,024 |
|
Operating
lease liabilities, net of current portion |
|
73,282 |
|
|
|
- |
|
Other
long-term liabilities |
|
6,962 |
|
|
|
14,717 |
|
Total liabilities |
|
2,001,365 |
|
|
|
1,869,082 |
|
Commitments
and Contingencies (Note 14) |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit) |
|
|
|
|
|
Common
stock, par value of $0.0001 per share; 1,600,000,000 shares
authorized; 153,638,836 shares issued and 150,851,689 shares
outstanding at December 31, 2019 and 152,692,140 shares issued and
150,142,955 shares outstanding at December 31, 2018 (including in
each case the 4,570,734 shares returned to the Company in the first
quarter of 2020 in connection with the Appraisal Action) |
|
15 |
|
|
|
15 |
|
Preferred
stock, par value of $0.0001 per share; 20,000,000 shares
authorized; 4,294,233 shares issued and outstanding at December 31,
2019 and 4,569,233 shares issued and outstanding at December 31,
2018 |
|
1 |
|
|
|
1 |
|
Additional
paid in capital |
|
445,452 |
|
|
|
445,452 |
|
Less: Common
Stock held in treasury, at cost; 2,787,147 shares at December 31,
2019 and 2,549,185 shares December 31, 2018 |
|
(10,949 |
) |
|
|
(10,342 |
) |
Equity-based
compensation |
|
49,336 |
|
|
|
41,731 |
|
Accumulated
deficit |
|
(1,211,508 |
) |
|
|
(702,392 |
) |
Accumulated
other comprehensive loss: |
|
|
|
|
|
Foreign
currency translation adjustment |
|
(7,329 |
) |
|
|
(6,423 |
) |
Unrealized
pension actuarial losses, net of tax |
|
(8,059 |
) |
|
|
(9,301 |
) |
Total
accumulated other comprehensive loss |
|
(15,388 |
) |
|
|
(15,724 |
) |
Total stockholders’ deficit |
|
(743,041 |
) |
|
|
(241,259 |
) |
Total liabilities and stockholders’ deficit |
$ |
1,258,324 |
|
|
$ |
1,627,823 |
|
|
Exela Technologies, Inc. and
SubsidiariesConsolidated Statements of Operations
for the three and twelve months ended December 31, 2019, 2018 and
2017(in thousands of United States dollars except share
and per share amounts)
|
Years ended December 31, |
|
2019 |
|
|
2018 (As Restated) |
|
2017 (As Restated) |
Revenue |
$ |
1,562,337 |
|
|
$ |
1,586,222 |
|
|
$ |
1,145,891 |
|
Cost of
revenue (exclusive of depreciation and amortization) |
|
1,224,735 |
|
|
|
1,213,403 |
|
|
|
827,544 |
|
Selling,
general and administrative expenses (exclusive of depreciation and
amortization) |
|
198,864 |
|
|
|
184,908 |
|
|
|
220,955 |
|
Depreciation
and amortization |
|
100,903 |
|
|
|
138,077 |
|
|
|
98,890 |
|
Impairment
of goodwill and other intangible assets |
|
349,557 |
|
|
|
48,127 |
|
|
|
69,437 |
|
Related
party expense |
|
9,501 |
|
|
|
12,403 |
|
|
|
33,431 |
|
Operating loss |
|
(321,223 |
) |
|
|
(10,696 |
) |
|
|
(104,366 |
) |
Other expense (income), net: |
|
|
|
|
|
|
|
|
Interest expense, net |
|
163,449 |
|
|
|
155,991 |
|
|
|
129,676 |
|
Debt modification and extinguishment costs |
|
1,404 |
|
|
|
1,067 |
|
|
|
35,512 |
|
Sundry expense (income), net |
|
969 |
|
|
|
(3,271 |
) |
|
|
2,295 |
|
Other expense (income), net |
|
14,429 |
|
|
|
(3,030 |
) |
|
|
(1,297 |
) |
Net
loss before income taxes |
|
(501,474 |
) |
|
|
(161,453 |
) |
|
|
(270,552 |
) |
Income tax
(expense) benefit |
|
(7,642 |
) |
|
|
(8,353 |
) |
|
|
61,068 |
|
Net
loss |
$ |
(509,116 |
) |
|
$ |
(169,806 |
) |
|
$ |
(209,484 |
) |
Dividend equivalent on Series A Preferred Stock related to
beneficial conversion feature |
|
— |
|
|
|
— |
|
|
|
(16,375 |
) |
Cumulative dividends for Series A Preferred Stock |
|
(3,309 |
) |
|
|
(3,655 |
) |
|
|
(2,489 |
) |
Net
loss attributable to common stockholders |
$ |
(512,425 |
) |
|
$ |
(173,461 |
) |
|
$ |
(228,348 |
) |
Loss
per share: |
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(3.52 |
) |
|
$ |
(1.17 |
) |
|
$ |
(2.18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Exela Technologies, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows For the year ended December 31, 2019, 2018
and 2017(in thousands of United States dollars unless
otherwise stated)
|
Years ended December 31, |
|
2019 |
|
2018 (As Restated) |
|
2017 (As Restated) |
Cash
flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
$ |
(509,116 |
) |
|
$ |
(169,806 |
) |
|
$ |
(209,484 |
) |
Adjustments
to reconcile net loss |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
100,903 |
|
|
|
138,077 |
|
|
|
98,890 |
|
Fees paid in stock |
|
— |
|
|
|
— |
|
|
|
28,573 |
|
HGM contract termination fee paid in stock |
|
— |
|
|
|
— |
|
|
|
10,000 |
|
Original issue discount and debt issuance cost amortization |
|
11,777 |
|
|
|
10,913 |
|
|
|
12,280 |
|
Debt modification and extinguishment costs |
|
1,049 |
|
|
|
103 |
|
|
|
34,459 |
|
Impairment of goodwill and other intangible assets |
|
349,557 |
|
|
|
48,127 |
|
|
|
69,437 |
|
Provision for doubtful accounts |
|
4,304 |
|
|
|
2,767 |
|
|
|
500 |
|
Deferred income tax provision |
|
1,093 |
|
|
|
3,220 |
|
|
|
(67,545 |
) |
Share-based compensation expense |
|
7,827 |
|
|
|
7,647 |
|
|
|
6,743 |
|
Foreign currency remeasurement |
|
(511 |
) |
|
|
(1,180 |
) |
|
|
1,382 |
|
Loss (gain) on sale of assets |
|
556 |
|
|
|
2,687 |
|
|
|
556 |
|
Fair value adjustment for interest rate swap |
|
4,337 |
|
|
|
(2,540 |
) |
|
|
(1,297 |
) |
Change in operating assets and liabilities, net of effect from
acquisitions |
|
|
|
|
|
|
|
|
Accounts receivable |
|
4,410 |
|
|
|
(19,319 |
) |
|
|
(4,832 |
) |
Prepaid expenses and other assets |
|
(4,825 |
) |
|
|
(2,820 |
) |
|
|
1,029 |
|
Accounts payable and accrued liabilities |
|
(19,588 |
) |
|
|
8,815 |
|
|
|
77,171 |
|
Related party payables |
|
(14,339 |
) |
|
|
918 |
|
|
|
4,907 |
|
Additions to outsource contract costs |
|
(1,285 |
) |
|
|
(4,009 |
) |
|
|
(10,992 |
) |
Net cash provided by (used in) operating
activities |
|
(63,851 |
) |
|
|
23,600 |
|
|
|
51,777 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of
property, plant and equipment |
|
(14,360 |
) |
|
|
(20,072 |
) |
|
|
(14,440 |
) |
Additions to
internally developed software |
|
(6,182 |
) |
|
|
(7,438 |
) |
|
|
(7,843 |
) |
Additions to
outsourcing contract costs |
|
— |
|
|
|
— |
|
|
|
— |
|
Cash
acquired in Quinpario reverse merger |
|
— |
|
|
|
— |
|
|
|
91 |
|
Cash paid in
acquisition, net of cash received |
|
(5,000 |
) |
|
|
(34,810 |
) |
|
|
(423,797 |
) |
Proceeds
from sale of assets |
|
360 |
|
|
|
3,568 |
|
|
|
4,607 |
|
Net cash provided by (used in) investing
activities |
|
(25,182 |
) |
|
|
(58,752 |
) |
|
|
(441,382 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
|
|
|
Change in
bank overdraft |
|
— |
|
|
|
— |
|
|
|
(210 |
) |
Loss on
extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
Proceeds
from issuance of stock |
|
— |
|
|
|
— |
|
|
|
204,417 |
|
Cash
received from Quinpario |
|
— |
|
|
|
— |
|
|
|
22,333 |
|
Repurchases
of Common Stock |
|
(3,480 |
) |
|
|
(7,221 |
) |
|
|
(249 |
) |
Contribution
from Shareholders |
|
— |
|
|
|
— |
|
|
|
20,548 |
|
Cash paid
for equity issuance costs |
|
— |
|
|
|
(7,500 |
) |
|
|
(149 |
) |
Net
borrowings under factoring arrangement |
|
3,307 |
|
|
|
— |
|
|
|
— |
|
Cash paid
for withholding taxes on vested RSUs |
|
(223 |
) |
|
|
— |
|
|
|
— |
|
Lease
terminations |
|
(318 |
) |
|
|
(592 |
) |
|
|
(157 |
) |
Retirement
of previous credit facilities |
|
— |
|
|
|
— |
|
|
|
(1,055,736 |
) |
Cash paid
for debt issuance costs |
|
(7 |
) |
|
|
(130 |
) |
|
|
(38,784 |
) |
Principal
payments on finance lease obligations |
|
(20,465 |
) |
|
|
(16,068 |
) |
|
|
(11,361 |
) |
Borrowings
from senior secured revolving facility |
|
206,500 |
|
|
|
30,000 |
|
|
|
72,600 |
|
Repayments
on senior secured revolving facility |
|
(141,500 |
) |
|
|
(30,000 |
) |
|
|
(72,500 |
) |
Proceeds
from issuance of notes |
|
— |
|
|
|
— |
|
|
|
977,500 |
|
Proceeds
from senior secured term loans |
|
29,850 |
|
|
|
30,000 |
|
|
|
343,000 |
|
Borrowings
from other loans |
|
39,153 |
|
|
|
11,557 |
|
|
|
3,116 |
|
Principal
repayments on senior secured term loans and other loans |
|
(53,678 |
) |
|
|
(12,651 |
) |
|
|
(27,955 |
) |
Net cash provided by (used in) financing
activities |
|
59,139 |
|
|
|
(2,605 |
) |
|
|
436,413 |
|
Effect of
exchange rates on cash |
|
139 |
|
|
|
122 |
|
|
|
429 |
|
Net decrease in cash and cash equivalents |
|
(29,755 |
) |
|
|
(37,635 |
) |
|
|
47,237 |
|
Cash,
restricted cash, and cash equivalents |
|
|
|
|
|
|
|
|
Beginning of
period |
|
43,854 |
|
|
|
81,489 |
|
|
|
34,252 |
|
End of
period |
$ |
14,099 |
|
|
$ |
43,854 |
|
|
$ |
81,489 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow data: |
|
|
|
|
|
|
|
|
Income tax
payments, net of refunds received |
$ |
7,882 |
|
|
$ |
7,827 |
|
|
$ |
5,711 |
|
Interest
paid |
|
144,456 |
|
|
|
146,076 |
|
|
|
69,622 |
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Assets
acquired through right-of-use arrangements |
|
10,732 |
|
|
|
14,920 |
|
|
|
6,973 |
|
Leasehold
improvements funded by lessor |
|
— |
|
|
|
1,565 |
|
|
|
146 |
|
Issuance of
Common Stock as consideration for Novitex |
|
— |
|
|
|
— |
|
|
|
244,800 |
|
Accrued
capital expenditures |
|
1,402 |
|
|
|
2,820 |
|
|
|
1,621 |
|
Dividend
equivalent on Series A Preferred Stock |
|
— |
|
|
|
— |
|
|
|
16,375 |
|
Liability
assumed of Quinpario |
|
— |
|
|
|
— |
|
|
|
4,698 |
|
|
|
|
|
|
|
|
|
|
Exela
TechnologiesSchedule 1: Fourth Quarter and Full
Year 2018 vs. Fourth Quarter and Full Year 2019 Financial
Performance
|
|
|
Q4'19 |
Q4'18 |
|
|
|
FY19 |
FY18 |
|
$ in millions |
Actual |
As restated |
|
Change ($) |
|
Actual |
As restated |
Change ($) |
|
|
|
|
|
|
|
|
|
|
|
Information and Transaction Processing Solutions |
306.7 |
|
324.3 |
|
|
(17.6 |
) |
|
1,234.3 |
|
1,273.6 |
|
(39.4 |
) |
Healthcare Solutions |
69.8 |
|
56.3 |
|
|
13.5 |
|
|
256.7 |
|
228.0 |
|
28.7 |
|
Legal and Loss Prevention Services |
17.1 |
|
19.1 |
|
|
(2.0 |
) |
|
71.3 |
|
84.6 |
|
(13.2 |
) |
Total Revenue |
393.6 |
|
399.6 |
|
|
(6.1 |
) |
|
1,562.3 |
|
1,586.2 |
|
(23.9 |
) |
% change |
-1.5 |
% |
|
|
|
|
-1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization) |
314.9 |
|
306.7 |
|
|
8.2 |
|
|
1,224.7 |
|
1,213.4 |
|
11.3 |
|
Gross profit |
78.7 |
|
93.0 |
|
|
(14.3 |
) |
|
337.6 |
|
372.8 |
|
(35.2 |
) |
as a % of revenue |
20.0 |
% |
23.3 |
% |
|
|
|
21.6 |
% |
23.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
SG&A |
49.7 |
|
48.1 |
|
|
1.6 |
|
|
198.9 |
|
184.9 |
|
14.0 |
|
Depreciation and amortization |
24.4 |
|
33.7 |
|
|
(9.3 |
) |
|
100.9 |
|
138.1 |
|
(37.2 |
) |
Impairment of goodwill and other intangible assets |
252.4 |
|
48.1 |
|
|
204.3 |
|
|
349.6 |
|
48.1 |
|
301.4 |
|
Related party expense |
1.7 |
|
3.7 |
|
|
(1.9 |
) |
|
9.5 |
|
12.4 |
|
(2.9 |
) |
Operating (loss) income |
(249.5 |
) |
(40.6 |
) |
|
(208.9 |
) |
|
(321.2 |
) |
(10.7 |
) |
(310.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
43.2 |
|
39.0 |
|
|
4.2 |
|
|
163.4 |
|
156.0 |
|
7.5 |
|
Loss on extinguishment of debt |
- |
|
- |
|
|
- |
|
|
1.4 |
|
1.1 |
|
0.3 |
|
Sundry expense (income) & Other income, net |
9.4 |
|
3.5 |
|
|
5.9 |
|
|
15.4 |
|
(6.3 |
) |
21.7 |
|
Net loss before income taxes |
(302.1 |
) |
(83.1 |
) |
|
(219.1 |
) |
|
(501.5 |
) |
(161.5 |
) |
(340.0 |
) |
Income tax expense (benefit) |
2.0 |
|
3.4 |
|
|
(1.5 |
) |
|
7.6 |
|
8.4 |
|
(0.7 |
) |
Net income (loss) |
(304.1 |
) |
(86.5 |
) |
|
(217.6 |
) |
|
(509.1 |
) |
(169.8 |
) |
(339.3 |
) |
|
|
|
|
|
|
|
|
|
- |
|
|
Depreciation and amortization |
24.4 |
|
33.7 |
|
|
(9.3 |
) |
|
100.9 |
|
138.1 |
|
(37.2 |
) |
Interest expense, net |
43.2 |
|
39.0 |
|
|
4.2 |
|
|
163.4 |
|
156.0 |
|
7.5 |
|
Income tax expense (benefit) |
2.0 |
|
3.4 |
|
|
(1.5 |
) |
|
7.6 |
|
8.4 |
|
(0.7 |
) |
EBITDA |
(234.5 |
) |
(10.4 |
) |
|
(224.1 |
) |
|
(237.1 |
) |
132.6 |
|
(369.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
EBITDA Adjustments |
|
|
|
|
|
|
|
|
1 |
|
Gain / loss on derivative instruments |
(0.6 |
) |
2.9 |
|
|
(3.5 |
) |
|
4.3 |
|
(1.9 |
) |
6.2 |
|
2 |
|
Non-Cash and
Other Charges |
271.9 |
|
59.0 |
|
|
212.9 |
|
|
407.9 |
|
86.4 |
|
321.6 |
|
3 |
|
Transaction
and integration costs |
1.5 |
|
2.0 |
|
|
(0.5 |
) |
|
5.7 |
|
4.8 |
|
0.9 |
|
|
|
Sub-Total (Adj. EBITDA before O&R) |
38.3 |
|
53.6 |
|
|
(15.3 |
) |
|
180.9 |
|
221.9 |
|
(41.1 |
) |
4 |
|
Optimization and restructuring expenses |
14.7 |
|
19.1 |
|
|
(4.4 |
) |
|
73.9 |
|
54.2 |
|
19.7 |
|
|
|
Process Transformation |
14.0 |
|
17.4 |
|
|
(3.4 |
) |
|
69.2 |
|
51.1 |
|
18.1 |
|
|
|
Customer Transformation |
- |
|
- |
|
|
- |
|
|
0.1 |
|
- |
|
0.1 |
|
|
|
M
& A |
0.7 |
|
1.7 |
|
|
(1.0 |
) |
|
4.6 |
|
3.2 |
|
1.5 |
|
Adjusted EBITDA |
53.0 |
|
72.7 |
|
|
(19.6 |
) |
|
254.8 |
|
276.2 |
|
(21.4 |
) |
% change |
-27.0 |
% |
|
|
|
|
-7.7 |
% |
|
|
as a % of revenue |
13.5 |
% |
18.2 |
% |
|
-5 |
% |
|
16.3 |
% |
17.4 |
% |
-1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Exela
TechnologiesSchedule 2: Reconciliation of Adjusted
EBITDA and constant currency revenues
Non-GAAP constant currency revenue
reconciliation |
|
|
|
|
|
|
|
|
|
Three months ended |
|
Twelve months ended |
|
|
31-Dec-19 |
|
31-Dec-18 |
|
31-Dec-19 |
|
31-Dec-18 |
($ in millions) |
|
Actual |
|
As restated |
|
Actual |
|
As restated |
Revenues, as reported (GAAP) |
|
$ |
393.6 |
|
|
$ |
399.6 |
|
|
$ |
1,562.3 |
|
|
$ |
1,586.2 |
|
Foreign
currency exchange impact (1) |
|
|
1.8 |
|
|
|
|
|
15.2 |
|
|
|
Revenues, at constant currency (Non-GAAP) |
|
$ |
395.4 |
|
|
$ |
399.6 |
|
|
$ |
1,577.5 |
|
|
$ |
1,586.2 |
|
|
|
|
|
|
|
|
|
|
(1) Constant currency
excludes the impact of foreign currency fluctuations and is
computed by applying the average exchange rates for the three
months and twelve months ended December 31, 2018, to the revenues
during the corresponding period in 2019. |
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Twelve months ended |
|
|
31-Dec-19 |
|
31-Dec-18 |
|
31-Dec-19 |
|
31-Dec-18 |
($ in millions) |
|
Actual |
|
As restated |
|
Actual |
|
As restated |
Net loss (GAAP) |
|
$ |
(304.1 |
) |
|
$ |
(86.5 |
) |
|
$ |
(509.1 |
) |
|
$ |
(169.8 |
) |
Interest
expense |
|
|
43.2 |
|
|
|
39.0 |
|
|
|
163.4 |
|
|
|
156.0 |
|
Taxes |
|
|
2.0 |
|
|
|
3.4 |
|
|
|
7.6 |
|
|
|
8.4 |
|
Depreciation
and amortization |
|
|
24.4 |
|
|
|
33.7 |
|
|
|
100.9 |
|
|
|
138.1 |
|
EBITDA (Non-GAAP) |
|
$ |
(234.5 |
) |
|
$ |
(10.4 |
) |
|
$ |
(237.1 |
) |
|
$ |
132.6 |
|
Transaction
and integration costs |
|
|
1.5 |
|
|
|
2.0 |
|
|
|
5.7 |
|
|
|
4.8 |
|
Optimization
and restructuring expenses |
|
|
14.7 |
|
|
|
19.1 |
|
|
|
73.9 |
|
|
|
54.2 |
|
Gain / loss
on derivative instruments |
|
|
(0.6 |
) |
|
|
2.9 |
|
|
|
4.3 |
|
|
|
(1.9 |
) |
Other
Charges |
|
|
271.9 |
|
|
|
59.0 |
|
|
|
407.9 |
|
|
|
86.4 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
53.0 |
|
|
$ |
72.7 |
|
|
$ |
254.8 |
|
|
$ |
276.2 |
|
Foreign
currency exchange impact (1) |
|
|
0.1 |
|
|
|
|
|
1.1 |
|
|
|
- |
|
Adjusted EBITDA, at constant currency
(Non-GAAP) |
|
$ |
53.2 |
|
|
$ |
72.7 |
|
|
$ |
255.9 |
|
|
$ |
276.2 |
|
|
|
|
|
|
|
|
|
|
(1) Constant currency
excludes the impact of foreign currency fluctuations and is
computed by applying the average exchange rates for the three
months and nine months ended December 31, 2018, to the adjusted
EBITDA during the corresponding period in 2019. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 3:
Non-GAAP Revenue reconciliation & Adjusted EBITDA margin on
Revenue net of pass through & LMCE |
|
|
|
|
|
|
|
|
|
Non-GAAP
revenue reconciliation & Adjusted EBITDA margin on revenue net
of pass through & LMCE |
|
|
Three months ended |
|
Twelve months ended |
|
|
31-Dec-19 |
|
31-Dec-18 |
|
31-Dec-19 |
|
31-Dec-18 |
($ in millions) |
|
Actual |
|
As restated |
|
Actual |
|
As restated |
Revenues, as reported (GAAP) |
|
$ |
393.6 |
|
|
$ |
399.6 |
|
|
$ |
1,562.3 |
|
|
$ |
1,586.2 |
|
(-) Postage
& postage handling |
|
|
70.1 |
|
|
|
77.2 |
|
|
|
275.3 |
|
|
|
310.1 |
|
Revenue - Net of pass through (Non-GAAP) |
|
$ |
323.5 |
|
|
$ |
322.4 |
|
|
$ |
1,287.0 |
|
|
$ |
1,276.1 |
|
(-)
LMCE |
|
|
- |
|
|
|
3.6 |
|
|
|
2.1 |
|
|
|
28.0 |
|
Revenue - Net of pass through & LMCE
(Non-GAAP) |
|
$ |
323.5 |
|
|
$ |
318.8 |
|
|
$ |
1,284.9 |
|
|
$ |
1,248.1 |
|
Revenue
growth % |
|
|
1.5 |
% |
|
|
|
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
53.0 |
|
|
$ |
72.7 |
|
|
$ |
254.8 |
|
|
$ |
276.2 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
|
16.4 |
% |
|
|
22.8 |
% |
|
|
19.8 |
% |
|
|
22.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media Contact: Kevin McLaughlinE:
kevin.mclaughlin@icrinc.comT: 646-277-1234
Investor Contact: William MainaE:
IR@exelatech.com T: 646-277-1236
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