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 second quarter ended June 30, 2020.
“We are pleased with our second quarter 2020
results and execution in light of the difficult operating
environment due to COVID-19. We generated revenue above our prior
guidance and delivered sequential improvements in both our gross
profit and adjusted EBITDA margins in the second quarter. In
addition, we continued to make progress against our liquidity
improvement and core business optimization initiatives by
completing the divestiture of our non-core records storage business
in July. So far, our 2020 results are playing out as we previously
expected with the second quarter representing our fiscal year low
point, and we have increased confidence that our financial
performance will improve in the back half of 2020 as volumes begin
to rise and our incremental cost reduction initiatives continue to
flow through the model. We remain confident that Exela is well
positioned to navigate this uncertain environment and emerge a
stronger company than before,” said Ronald Cogburn, Chief Executive
Officer of Exela.
Second Quarter 2020 Financial
Highlights
- Revenue: Revenue
was $307.7 million, a decline of 21.3% from $390.8 million in the
second quarter of 2019. Revenue for the Information and Transaction
Processing Solutions segment was $243.0 million, a decline of 21.6%
year-over-year, primarily due to reduced customer volumes as a
result of COVID-19, as well as the exit of contracts and statements
of work from certain customers with revenue that the Company
believes are unpredictable, non-recurring, and were not a strategic
fit to its long-term success or unlikely to achieve long-term
target margins. Healthcare Solutions revenue was $49.2 million, a
decrease of 22.4% year-over-year, driven by reduced volumes as a
result of COVID-19. Legal and Loss Prevention Services revenue was
$15.5 million, a decline of 11.9% from the second quarter of
2019. Revenue
excluding the previously announced low margin contract exit
(“LMCE”) and pass through revenues from postage and postage
handling with either zero or nominal margins (“pass through
revenue”) (4) was $252.5 million in the second
quarter of 2020, representing a decrease of 22.2% from $324.4
million in the second quarter of 2019.
83%
of second quarter 2020 revenue was earned in the Americas, 15% in
EMEA and 2% in rest of
world.
- Operating income /
(loss): Operating loss for the second quarter of 2020 was
$5.1 million, compared with operating income of $5.7 million in the
second quarter of 2019. The year-over-year decrease in operating
income was primarily attributable to lower revenue and gross
profit, partially offset by lower SG&A expense, depreciation
and amortization expense, and related party expenses, compared with
the second quarter of 2019.
- Net Loss: Net Loss
for the second quarter of 2020 was $48.7 million, compared with a
net loss of $41.6 million in the second quarter of 2019.
- Adjusted
EBITDA: Adjusted EBITDA for the second quarter of
2020 was $43.1 million, compared to $44.4 million in the first
quarter of 2020 and $64.9 million in the second quarter of 2019.
Adjusted EBITDA margin for the second quarter of 2020 was 14.0%,
compared to 12.1% in the first quarter of 2020 and 16.6% in the
second quarter of 2019. The sequential improvement in second
quarter 2020 Adjusted EBITDA margin reflects flow through of the
Company’s ongoing cost containment initiatives.Adjusted EBITDA
margin, based on revenue excluding LMCE and pass through revenue,
was 17.1% in the second quarter of 2020, compared with 15.0% in the
first quarter of 2020 and 20.0% in the second quarter of
2019.
- Capital
Expenditures: Capital expenditures for the second
quarter of 2020 were 1.1% of revenue compared to 1.4% of revenue in
the second quarter of 2019.
- Common Stock: As
of June 30, 2020, there were 147,511,430 total shares of common
stock outstanding and an additional 4,022,415 shares of common
stock reserved for issuance for our outstanding preferred shares on
an as-converted basis.
- Total employees as of June 30, 2020
were 21,073 as compared to 22,058 as of March 31, 2020.
Balance Sheet: At June 30,
2020, Exela’s total net debt was $1.515 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
has announced three transactions year-to-date 2020.
- On January 15, 2020, Exela
announced that the Company 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.
- On July 23, 2020, Exela announced
the sale of its physical records storage and logistics business for
$12.3 million. The assets involved in the business generated
approximately $1.0 million of EBITDA in 2019.
- The Company believes it is on
schedule for additional divestitures with expected proceeds in the
range of $100.0 million to $150.0 million in the aggregate.
Third Quarter and Full Year 2020
Outlook
- For the third quarter of 2020,
Exela currently expects revenue to be in the range of $305 million
to $312 million.
- 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 has maintained
suspension of providing financial guidance for full year 2020. The
Company continues to expect that gross profit margins will increase
post COVID-19 downdraft as volumes normalize.
(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
second quarter 2020 financial results at 11:00 a.m. ET on August
11, 2020. To access this call, dial 833-255-2831 or
+412-902-6724 (international). A replay of this conference
call will be available through August 18, 2020 at 877-344-7529 or +
412-317-0088 (international). The replay passcode is
10146883. 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. is a business process automation 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 21,000 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
described in additional detail in the Explanatory Note to the
Company’s Annual Report on Form 10-K filed with the SEC on June 9,
2020 (the “Annual Report”), the Company restated its audited
consolidated financial statements in the for the years ended
December 31, 2018 and 2017 and its unaudited quarterly results for
the first three fiscal quarters in the fiscal year ended December
31, 2019 and each fiscal quarter in the fiscal year ended December
31, 2018 in the Annual Report. 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.
See Note 20, Unaudited Quarterly Financial Data, of the Notes
to the consolidated financial statements in the Annual Report for
the impact of these adjustments on each of the quarterly periods in
fiscal 2018 and for the first three quarters of fiscal 2019.
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, estimated or anticipated future results
and benefits, future opportunities for Exela, 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 the Annual Report. 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 June 30, 2020 and December 31, 2019(in
thousands of United States dollars except share and per share
amounts)
|
|
June 30, |
|
December 31, |
|
|
|
2020 |
|
2019 |
|
|
|
(Unaudited) |
|
(Audited) |
|
Assets |
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
86,470 |
|
|
$ |
6,198 |
|
|
Restricted
cash |
|
|
5,457 |
|
|
|
7,901 |
|
|
Accounts
receivable, net of allowance for doubtful accounts of $5,362 and
$4,975, respectively |
|
|
219,433 |
|
|
|
261,400 |
|
|
Related
party receivables |
|
|
906 |
|
|
|
716 |
|
|
Inventories,
net |
|
|
17,268 |
|
|
|
19,047 |
|
|
Prepaid
expenses and other current assets |
|
|
33,695 |
|
|
|
23,663 |
|
|
Total current assets |
|
|
363,229 |
|
|
|
318,925 |
|
|
Property,
plant and equipment, net of accumulated depreciation of $187,260
and $176,995, respectively |
|
|
100,878 |
|
|
|
113,637 |
|
|
Operating
lease right-of-use assets, net |
|
|
90,067 |
|
|
|
93,627 |
|
|
Goodwill |
|
|
359,009 |
|
|
|
359,771 |
|
|
Intangible
assets, net |
|
|
317,630 |
|
|
|
342,443 |
|
|
Deferred
income tax assets |
|
|
11,769 |
|
|
|
12,032 |
|
|
Other
noncurrent assets |
|
|
25,961 |
|
|
|
17,889 |
|
|
Total assets |
|
$ |
1,268,543 |
|
|
$ |
1,258,324 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
(Deficit) |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Accounts
payables |
|
$ |
67,385 |
|
|
$ |
86,167 |
|
|
Related
party payables |
|
|
2 |
|
|
|
1,740 |
|
|
Income tax
payable |
|
|
2,333 |
|
|
|
352 |
|
|
Accrued
liabilities |
|
|
116,376 |
|
|
|
121,553 |
|
|
Accrued
compensation and benefits |
|
|
52,636 |
|
|
|
48,574 |
|
|
Accrued
interest |
|
|
48,127 |
|
|
|
48,769 |
|
|
Customer
deposits |
|
|
27,301 |
|
|
|
27,765 |
|
|
Deferred
revenue |
|
|
19,179 |
|
|
|
16,282 |
|
|
Obligation
for claim payment |
|
|
34,801 |
|
|
|
39,156 |
|
|
Current
portion of finance lease liabilities |
|
|
12,831 |
|
|
|
13,788 |
|
|
Current
portion of operating lease liabilities |
|
|
24,271 |
|
|
|
25,345 |
|
|
Current
portion of long-term debts |
|
|
36,101 |
|
|
|
36,490 |
|
|
Total current liabilities |
|
|
441,343 |
|
|
|
465,981 |
|
|
Long-term
debt, net of current maturities |
|
|
1,493,775 |
|
|
|
1,398,385 |
|
|
Finance
lease liabilities, net of current portion |
|
|
14,437 |
|
|
|
20,272 |
|
|
Pension
liabilities |
|
|
23,881 |
|
|
|
25,681 |
|
|
Deferred
income tax liabilities |
|
|
7,685 |
|
|
|
7,996 |
|
|
Long-term
income tax liabilities |
|
|
2,808 |
|
|
|
2,806 |
|
|
Operating
lease liabilities, net of current portion |
|
|
71,661 |
|
|
|
73,282 |
|
|
Other
long-term liabilities |
|
|
12,807 |
|
|
|
6,962 |
|
|
Total liabilities |
|
|
2,068,397 |
|
|
|
2,001,365 |
|
|
Commitments
and Contingencies (Note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit) |
|
|
|
|
|
|
|
Common
stock, par value of $0.0001 per share; 1,600,000,000 shares
authorized; 154,866,550 shares issued and 147,511,430 shares
outstanding at June 30, 2020 and 153,638,836 shares issued and
150,851,689 shares outstanding at December 31, 2019 |
|
|
15 |
|
|
|
15 |
|
|
Preferred
stock, par value of $0.0001 per share; 20,000,000 shares
authorized; 3,290,050 shares issued and outstanding at June 30,
2020 and 4,294,233 shares issued and outstanding at December 31,
2019 |
|
|
1 |
|
|
|
1 |
|
|
Additional
paid in capital |
|
|
446,739 |
|
|
|
445,452 |
|
|
Less: Common
Stock held in treasury, at cost; 7,355,120 shares at June 30, 2020
and 2,787,147 shares at December 31, 2019 |
|
|
(10,949 |
) |
|
|
(10,949 |
) |
|
Equity-based
compensation |
|
|
51,118 |
|
|
|
49,336 |
|
|
Accumulated
deficit |
|
|
(1,272,869 |
) |
|
|
|
(1,211,508 |
) |
|
Accumulated
other comprehensive loss: |
|
|
|
|
|
|
|
Foreign
currency translation adjustment |
|
|
(6,387 |
) |
|
|
(7,329 |
) |
|
Unrealized
pension actuarial losses, net of tax |
|
|
(7,522 |
) |
|
|
(8,059 |
) |
|
Total
accumulated other comprehensive loss |
|
|
(13,909 |
) |
|
|
(15,388 |
) |
|
Total stockholders’ deficit |
|
|
(799,854 |
) |
|
|
(743,041 |
) |
|
Total liabilities and stockholders’ deficit |
|
$ |
1,268,543 |
|
|
$ |
1,258,324 |
|
|
Exela Technologies, Inc. and
SubsidiariesConsolidated Statements of Operations
for the three and six months ended June 30, 2020 and
2019(in thousands of United States dollars except share
and per share amounts)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2019 |
|
|
|
2019 |
|
|
2020 |
|
(Restated) |
|
2020 |
|
(Restated) |
Revenue |
|
$ |
307,722 |
|
|
$ |
390,849 |
|
|
$ |
673,173 |
|
|
$ |
795,206 |
|
Cost of
revenue (exclusive of depreciation and amortization) |
|
|
241,788 |
|
|
|
303,831 |
|
|
|
534,326 |
|
|
|
614,432 |
|
Selling,
general and administrative expenses (exclusive of depreciation and
amortization) |
|
|
47,014 |
|
|
|
51,162 |
|
|
|
97,387 |
|
|
|
100,839 |
|
Depreciation
and amortization |
|
|
22,847 |
|
|
|
24,779 |
|
|
|
46,032 |
|
|
|
51,403 |
|
Related
party expense |
|
|
1,146 |
|
|
|
5,331 |
|
|
|
2,698 |
|
|
|
6,329 |
|
Operating income (loss) |
|
|
(5,073 |
) |
|
|
5,746 |
|
|
|
(7,270 |
) |
|
|
22,203 |
|
Other expense (income), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
44,440 |
|
|
|
39,959 |
|
|
|
86,028 |
|
|
|
79,660 |
|
Debt modification and extinguishment costs |
|
|
— |
|
|
|
1,404 |
|
|
|
— |
|
|
|
1,404 |
|
Sundry expense (income), net |
|
|
(899 |
) |
|
|
(1,311 |
) |
|
|
183 |
|
|
|
1,404 |
|
Other expense (income), net |
|
|
(584 |
) |
|
|
2,527 |
|
|
|
(35,241 |
) |
|
|
4,020 |
|
Net
loss before income taxes |
|
|
(48,030 |
) |
|
|
(36,833 |
) |
|
|
(58,240 |
) |
|
|
(64,285 |
) |
Income tax expense |
|
|
(661 |
) |
|
|
(4,738 |
) |
|
|
(3,120 |
) |
|
|
(9,458 |
) |
Net
loss |
|
$ |
(48,691 |
) |
|
$ |
(41,571 |
) |
|
$ |
(61,360 |
) |
|
$ |
(73,743 |
) |
Cumulative dividends for Series A Preferred Stock |
|
|
(858 |
) |
|
|
(914 |
) |
|
|
582 |
|
|
|
(1,828 |
) |
Net
loss attributable to common stockholders |
|
$ |
(49,549 |
) |
|
$ |
(42,485 |
) |
|
$ |
(60,778 |
) |
|
$ |
(75,571 |
) |
Loss
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.34 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.52 |
) |
Exela Technologies, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows For the six months ended June 30, 2020 and
2019(in thousands of United States dollars unless
otherwise stated)
|
Six Months Ended June 30, |
|
|
|
|
2019 |
|
|
2020 |
|
(Restated) |
|
Cash
flows from operating activities |
|
|
|
|
|
|
Net
loss |
$ |
(61,360 |
) |
|
$ |
(73,743 |
) |
|
Adjustments
to reconcile net loss |
|
|
|
|
|
|
Depreciation and amortization |
|
46,032 |
|
|
|
51,403 |
|
|
Original issue discount and debt issuance cost amortization |
|
6,857 |
|
|
|
5,749 |
|
|
Debt modification and extinguishment costs |
|
— |
|
|
|
1,049 |
|
|
Provision for doubtful accounts |
|
(110 |
) |
|
|
3,334 |
|
|
Deferred income tax provision |
|
(338 |
) |
|
|
4,623 |
|
|
Share-based compensation expense |
|
1,782 |
|
|
|
5,459 |
|
|
Foreign currency remeasurement |
|
(980 |
) |
|
|
288 |
|
|
Loss (gain) on sale of assets |
|
(34,791 |
) |
|
|
85 |
|
|
Fair value adjustment for interest rate swap |
|
440 |
|
|
|
4,385 |
|
|
Change in operating assets and liabilities, net effect from
acquisitions: |
|
|
|
|
|
|
Accounts receivable |
|
38,260 |
|
|
|
624 |
|
|
Prepaid expenses and other assets |
|
(9,157 |
) |
|
|
1,260 |
|
|
Accounts payable and accrued liabilities |
|
(8,812 |
) |
|
|
(12,595 |
) |
|
Related party balances |
|
(642 |
) |
|
|
(3,899 |
) |
|
Additions to outsource contract costs |
|
(297 |
) |
|
|
(2,860 |
) |
|
Net cash used in operating activities |
|
(23,116 |
) |
|
|
(14,838 |
) |
|
|
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
|
Purchases of property, plant, and equipment |
|
(5,766 |
) |
|
|
(9,072 |
) |
|
Additions to internally developed software |
|
(2,216 |
) |
|
|
(4,007 |
) |
|
Cash paid in acquisition, net of cash received |
|
(3,500 |
) |
|
|
(5,000 |
) |
|
Proceeds from sale of assets |
|
38,222 |
|
|
|
20 |
|
|
Net cash provided by (used in) investing
activities |
|
26,740 |
|
|
|
(18,059 |
) |
|
|
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
|
Repurchases of Common Stock |
|
— |
|
|
|
(3,480 |
) |
|
Borrowings from other loans |
|
23,248 |
|
|
|
14,092 |
|
|
Borrowings under factoring arrangement and A/R Facility |
|
149,951 |
|
|
|
34,050 |
|
|
Principal repayment on borrowings under factoring arrangement and
A/R Facility |
|
(66,114 |
) |
|
|
(31,624 |
) |
|
Proceeds from senior secured term loans |
|
— |
|
|
|
29,850 |
|
|
Lease terminations |
|
(331 |
) |
|
|
(95 |
) |
|
Cash paid for debt issuance costs |
|
(12,708 |
) |
|
|
(7 |
) |
|
Borrowings from senior secured revolving facility |
|
29,750 |
|
|
|
68,000 |
|
|
Repayments on senior secured revolving facility |
|
(14,200 |
) |
|
|
(68,000 |
) |
|
Principal payments on finance lease obligations |
|
(6,353 |
) |
|
|
(9,180 |
) |
|
Principal repayments on senior secured term loans and other
loans |
|
(29,040 |
) |
|
|
(21,248 |
) |
|
Net cash provided by financing activities |
|
74,203 |
|
|
|
12,358 |
|
|
Effect of exchange rates on cash |
|
1 |
|
|
|
111 |
|
|
Net increase (decrease) in cash and cash
equivalents |
|
77,828 |
|
|
|
(20,428 |
) |
|
Cash, restricted cash, and cash equivalents |
|
|
|
|
|
|
Beginning of period |
|
14,099 |
|
|
|
43,854 |
|
|
End of period |
$ |
91,927 |
|
|
$ |
23,426 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow data: |
|
|
|
|
|
|
Income tax payments, net of refunds received |
$ |
1,339 |
|
|
$ |
5,181 |
|
|
Interest paid |
|
76,781 |
|
|
|
71,211 |
|
|
Noncash investing and financing activities: |
|
|
|
|
|
|
Assets acquired through right-of-use arrangements |
|
772 |
|
|
|
6,778 |
|
|
Settlement gain on related party payable to Ex-Sigma 2 |
|
1,287 |
|
|
|
— |
|
|
Accrued capital expenditures |
|
1,088 |
|
|
|
1,083 |
|
|
|
|
|
|
|
|
|
Exela
TechnologiesSchedule 1: Second Quarter 2020 vs.
Second Quarter 2019 Financial Performance
|
|
|
|
|
|
|
|
|
|
|
|
$ in millions |
Q2'20 |
Q2'19 |
|
Change ($) |
|
YTD'20 |
YTD'19 |
|
Change ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Information and Transaction Processing Solutions |
243.0 |
|
309.8 |
|
|
(66.8 |
) |
|
527.1 |
|
635.0 |
|
|
(107.9 |
) |
|
Healthcare Solutions |
49.2 |
|
63.4 |
|
|
(14.2 |
) |
|
113.2 |
|
124.7 |
|
|
(11.5 |
) |
|
Legal and Loss Prevention Services |
15.5 |
|
17.6 |
|
|
(2.1 |
) |
|
32.8 |
|
35.4 |
|
|
(2.6 |
) |
|
Total Revenue |
307.7 |
|
390.8 |
|
|
(83.1 |
) |
|
673.2 |
|
795.2 |
|
|
(122.0 |
) |
|
% change |
-21% |
|
-5% |
|
|
|
|
-15% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and
amortization) |
241.8 |
|
303.8 |
|
|
(62.0 |
) |
|
534.3 |
|
614.4 |
|
|
(80.1 |
) |
|
Gross profit |
65.9 |
|
87.0 |
|
|
(21.1 |
) |
|
138.8 |
|
180.8 |
|
|
(41.9 |
) |
|
as a % of revenue |
21% |
|
22% |
|
|
-0.8 |
% |
|
21% |
|
23% |
|
|
-2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A |
47.0 |
|
51.2 |
|
|
(4.1 |
) |
|
97.4 |
|
100.8 |
|
|
(3.5 |
) |
|
Depreciation and amortization |
22.8 |
|
24.8 |
|
|
(1.9 |
) |
|
46.0 |
|
51.4 |
|
|
(5.4 |
) |
|
Impairment of goodwill and other intangible assets |
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
|
Related party expense |
1.1 |
|
5.3 |
|
|
(4.2 |
) |
|
2.7 |
|
6.3 |
|
|
(3.6 |
) |
|
Operating (loss) income |
(5.1 |
) |
5.7 |
|
|
(10.8 |
) |
|
(7.3 |
) |
22.2 |
|
|
(29.5 |
) |
|
as a % of revenue |
-2% |
|
1% |
|
|
-3.1% |
|
|
-1% |
|
3% |
|
|
-3.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
44.4 |
|
40.0 |
|
|
4.5 |
|
|
86.0 |
|
79.7 |
|
|
6.4 |
|
|
Loss on extinguishment of debt |
- |
|
1.4 |
|
|
(1.4 |
) |
|
- |
|
1.4 |
|
|
(1.4 |
) |
|
Sundry expense (income) & Other income, net |
(1.5 |
) |
1.2 |
|
|
(2.7 |
) |
|
(35.1 |
) |
5.4 |
|
|
(40.5 |
) |
|
Net loss before income taxes |
(48.0 |
) |
(36.8 |
) |
|
(11.2 |
) |
|
(58.2 |
) |
(64.3 |
) |
|
6.0 |
|
|
Income tax expense (benefit) |
0.7 |
|
4.7 |
|
|
(4.1 |
) |
|
3.1 |
|
9.5 |
|
|
(6.3 |
) |
|
Net income (loss) |
(48.7 |
) |
(41.6 |
) |
|
(7.1 |
) |
|
(61.4 |
) |
(73.7 |
) |
|
12.4 |
|
|
as a % of revenue |
-16% |
|
-11% |
|
|
-5.2% |
|
|
-9% |
|
-9% |
|
|
0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
22.8 |
|
24.8 |
|
|
(1.9 |
) |
|
46.0 |
|
51.4 |
|
|
(5.4 |
) |
|
Interest expense, net |
44.4 |
|
40.0 |
|
|
4.5 |
|
|
86.0 |
|
79.7 |
|
|
6.4 |
|
|
Income tax expense (benefit) |
0.7 |
|
4.7 |
|
|
(4.1 |
) |
|
3.1 |
|
9.5 |
|
|
(6.3 |
) |
|
EBITDA |
19.3 |
|
27.9 |
|
|
(8.6 |
) |
|
73.8 |
|
66.8 |
|
|
7.0 |
|
|
as a % of revenue |
6% |
|
7% |
|
|
-0.9% |
|
|
11% |
|
8% |
|
|
2.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Adjustments |
|
|
|
|
|
|
|
|
|
|
1 |
Gain / loss on derivative instruments |
(0.4 |
) |
2.7 |
|
|
(3.1 |
) |
|
0.4 |
|
4.4 |
|
|
(3.9 |
) |
|
2 |
Non-Cash and
Other Charges |
7.8 |
|
13.5 |
|
|
(5.8 |
) |
|
(20.8 |
) |
24.7 |
|
|
(45.4 |
) |
|
3 |
Transaction
and integration costs |
4.8 |
|
2.0 |
|
|
2.8 |
|
|
9.2 |
|
3.0 |
|
|
6.1 |
|
|
|
Sub-Total (Adj. EBITDA before O&R) |
31.4 |
|
46.2 |
|
|
(14.8 |
) |
|
62.7 |
|
98.9 |
|
|
(36.2 |
) |
|
4 |
Optimization and restructuring expenses |
11.7 |
|
18.7 |
|
|
(7.0 |
) |
|
24.9 |
|
42.4 |
|
|
(17.5 |
) |
|
Adjusted EBITDA |
43.1 |
|
64.9 |
|
|
(21.7 |
) |
|
87.5 |
|
141.2 |
|
|
(53.7 |
) |
|
as a % of revenue |
14.0% |
|
16.6% |
|
|
-2.6% |
|
|
13.0% |
|
17.8% |
|
|
-4.8% |
|
|
Exela
TechnologiesSchedule 2: Reconciliation of Adjusted
EBITDA and constant currency revenues
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures to GAAP
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP constant currency revenue
reconciliation |
|
|
|
|
|
|
|
|
($ in millions) |
|
Three months ended |
|
Six months ended |
|
|
30-Jun-20 |
|
30-Jun-19 |
|
30-Jun-20 |
|
30-Jun-19 |
|
Revenues, as reported (GAAP) |
|
$307.7 |
|
|
$390.8 |
|
|
$673.2 |
|
|
$795.2 |
|
|
Foreign
currency exchange impact (1) |
|
|
1.4 |
|
|
|
|
|
3.2 |
|
|
|
|
Revenues, at constant currency (Non-GAAP) |
|
$309.2 |
|
|
$390.8 |
|
|
$676.4 |
|
|
$795.2 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Constant currency
excludes the impact of foreign currency fluctuations and is
computed by applying the average exchange rates for the three
months and six months ended June 30, 2019, to the revenues during
the corresponding period in 2020. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
($ in millions) |
|
Three months ended |
|
Six months ended |
|
|
30-Jun-20 |
|
30-Jun-19 |
|
30-Jun-20 |
|
30-Jun-19 |
|
Net loss (GAAP) |
|
($48.7 |
) |
|
($41.6 |
) |
|
($61.4 |
) |
|
($73.7 |
) |
|
Interest expense |
|
|
44.4 |
|
|
|
40.0 |
|
|
|
86.0 |
|
|
|
79.7 |
|
|
Taxes |
|
|
0.7 |
|
|
|
4.7 |
|
|
|
3.1 |
|
|
|
9.5 |
|
|
Depreciation
and amortization |
|
|
22.8 |
|
|
|
24.8 |
|
|
|
46.0 |
|
|
|
51.4 |
|
|
EBITDA (Non-GAAP) |
|
$19.3 |
|
|
$27.9 |
|
|
$73.8 |
|
|
$66.8 |
|
|
Transaction
and integration costs |
|
|
4.8 |
|
|
|
2.0 |
|
|
|
9.2 |
|
|
|
3.0 |
|
|
Optimization
and restructuring expenses |
|
|
11.7 |
|
|
|
18.7 |
|
|
|
24.9 |
|
|
|
42.4 |
|
|
Gain / loss
on derivative instruments |
|
|
(0.4 |
) |
|
|
2.7 |
|
|
|
0.4 |
|
|
|
4.4 |
|
|
Other
Charges |
|
|
7.8 |
|
|
|
13.5 |
|
|
|
(20.8 |
) |
|
|
24.7 |
|
|
Adjusted EBITDA (Non-GAAP) |
|
$43.1 |
|
|
$64.9 |
|
|
$87.5 |
|
|
$141.2 |
|
|
Foreign
currency exchange impact (1) |
|
|
0.2 |
|
|
|
|
|
1.1 |
|
|
|
- |
|
|
Adjusted EBITDA, at constant currency
(Non-GAAP) |
|
$43.3 |
|
|
$64.9 |
|
|
$88.6 |
|
|
$141.2 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Constant currency
excludes the impact of foreign currency fluctuations and is
computed by applying the average exchange rates for the three
months and six months ended June 30, 2019, to the adjusted EBITDA
during the corresponding period in 2020. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 3:
Non-GAAP Revenue reconciliation & Adjusted EBITDA margin on
Revenue net of pass through & LMCE |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
revenue reconciliation & Adjusted EBITDA margin on revenue net
of pass through & LMCE |
|
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
Three months ended |
|
Six months ended |
|
|
30-Jun-20 |
|
30-Jun-19 |
|
30-Jun-20 |
|
30-Jun-19 |
|
Revenues, as reported (GAAP) |
|
$307.7 |
|
|
$390.8 |
|
|
$673.2 |
|
|
$795.2 |
|
|
(-) Postage
& postage handling |
|
|
55.2 |
|
|
|
66.2 |
|
|
|
125.0 |
|
|
|
141.6 |
|
|
Revenue - Net of pass through (Non-GAAP) |
|
$252.5 |
|
|
$324.7 |
|
|
$548.2 |
|
|
$653.6 |
|
|
(-)
LMCE |
|
|
- |
|
|
|
0.3 |
|
|
|
- |
|
|
|
2.1 |
|
|
Revenue - Net of pass through & LMCE
(Non-GAAP) |
|
$252.5 |
|
|
$324.4 |
|
|
$548.2 |
|
|
$651.5 |
|
|
Revenue
growth % |
|
|
(22.2%) |
|
|
|
|
|
(15.9%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (Non-GAAP) |
|
$43.1 |
|
|
$64.9 |
|
|
$87.5 |
|
|
$141.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
|
17.1% |
|
|
|
20.0% |
|
|
|
16.0% |
|
|
|
21.7% |
|
|
|
|
|
|
|
|
|
|
|
|
Media Contact: Kevin McLaughlinE:
kevin.mclaughlin@icrinc.comT: 646-277-1234
Investor Contact: William MainaE:
IR@exelatech.comT: 646-277-1236
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