IBEX IBEX Limited

IBEX Limited (“ibex”), a leading global provider of outsourced CX solutions, today announced financial results for the fourth quarter and fiscal year ended June 30, 2020.

“Fiscal year 2020 was a milestone year for ibex–delivering record revenues surpassing $400 million, growing net income from continuing operations and increasing Adjusted EBITDA to over $50 million,” commented Bob Dechant, chief executive officer of ibex. “We continue to be focused on helping the world’s leading brands connect with their customers in unique and innovative ways, with particular focus on technology-led digital solutions. We also won important new logos with new economy and blue chip clients, and reported 100% client retention. Based on our expected revenue growth and robust pipeline, we are confident in our ability to accelerate additional customer wins, expand geographically and deliver solid cash flow in 2021.”

Fiscal Year 2020 Financial Highlights:

Revenue

• Revenue increased 10% to $405.1 million, compared to $368.4 million in the prior year.

Net Income / (Loss) From Continuing Operations

• Net income from continuing operations increased to $7.8 million, compared to a net loss from continuing operations of $4.5 million in the prior year.
• Net income / (loss) from continuing operations margin increased to 1.9%, compared to (1.2)% in the prior year.
• Non-GAAP adjusted net income from continuing operations increased to $15.6 million, compared to $1.8 million in the prior year.

Adjusted EBITDA

• Non-GAAP adjusted EBITDA from continuing operations increased to $54.1 million, compared to $36.3 million in the prior year.
• Non-GAAP adjusted EBITDA from continuing operations margin increased to 13.4%, compared to 9.9% in the prior year.

Earnings Per Share

• IFRS fully diluted earnings per share was $0.00 in fiscal years 2020 and 2019.*
• Non-GAAP pro forma adjusted earnings per share increased to $0.84, compared to $0.10 in the prior year.

Cash Flow, Balance Sheet, and Capital Expenditures

• Cash flow from operations increased to $51.7 million, compared to $2.2 million in the prior year.
• Non-GAAP free cash flow increased to $25.6 million, compared to an outflow of $2.5 million in the prior year.
• Non-GAAP net debt decreased to $84.1 million, compared to $109.4 million in the prior year.
• Capital expenditures were $16.9 million, or 4.2% of revenue, compared to $9.7 million, or 2.6% of prior year revenue.

Fourth Quarter 2020 Financial Highlights:

Revenue

• Revenue of $100.9 million was minimally impacted by COVID-19, and increased 14.7% compared to the prior year quarter.

Net Income / (Loss) From Continuing Operations

• Net loss from continuing operations decreased to $3.8 million, compared to a net loss from continuing operations of $4.6 million in the prior year quarter.
• Net loss from continuing operations margin decreased to (3.8)%, compared to (5.3)% in the prior year quarter.
• Non-GAAP adjusted net income from continuing operations increased to $2.6 million, compared to a non-GAAP adjusted net loss from continuing operations of $1.4 million in the prior year quarter.

Adjusted EBITDA

• Non-GAAP adjusted EBITDA from continuing operations increased to $13.5 million, compared to $7.4 million in the prior year quarter.
• Non-GAAP adjusted EBITDA from continuing operations margin increased to 13.4%, compared to 8.4% in the prior year quarter.

Earnings Per Share

• IFRS fully diluted earnings per share was $0.00 in the fourth quarter of fiscal years 2020 and 2019.*
• Non-GAAP pro forma adjusted earnings per share increased to $0.14, compared to ($0.07) in the prior year quarter.

* IFRS fully diluted earnings per share does not reflect the recapitalization that occurred in connection with ibex’s initial public offering.

Fiscal Year 2020 Business Highlights:

• Added 24 new customer logos
• Top three client concentration decreased to 43.7% from 50.6% in the prior year
• Launched the Wave X Purpose Built Technology Suite enabling highly customized CX solutions
• Digital business increased to 30% of our overall revenue to $119.6 million
• New Economy revenue increased by 35% compared to prior year
• Non-voice revenue increased by 42% compared to prior year
• Increased our nearshore and offshore footprint by opening three new sites and adding 1,730 workstations in the Philippines and 843 in nearshore sites, boosting our non-US capacity by 35% over prior year
• Expanded our digital marketing and on-line customer acquisition solutions by adding the Healthcare, Financial Services and Utility industries to our portfolio

2021 Business Outlook

IBEX Limited expects full year 2021 revenue of $431 million to $435 million and Adjusted EBITDA from continuing operations of $59.5 million to $61 million.

Conference Call and Webcast InformationIBEX Limited will host a conference call and live webcast to discuss its fourth quarter and fiscal year 2020 financial results at 4:30 p.m. Eastern Time today, September 24, 2020. To access the conference call, dial (833) 614-1408 for the U.S. or Canada, or for international callers (914) 987-7129 and provide conference ID 5273769. The webcast will be available live on the Investors section of ibex's website at: https://investors.ibex.co/.

An audio replay of the call will also be available to investors beginning at approximately 6:30 p.m. Eastern Time on September 24, 2020, until 7:30 p.m. Eastern Time on October 1, by dialing (855) 859-2056 for the U.S. or Canada, or for international callers, (404) 537-3406 and entering passcode 5273769. In addition, an archived webcast will be available on the Investors section of ibex's website at: https://investors.ibex.co/.

Financial Information

While the financial figures included in this press release have been computed in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to interim periods for the fourth quarter and applicable to financial statements for the fiscal year, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, “Interim Financial Reporting” nor a financial statement as defined by International Accounting Standards 1 “Presentation of Financial Statements.” The financial information in this press release has not been audited. Results for the fourth quarter of fiscal year 2020 and 2019 were calculated based on the difference between our unaudited results for fiscal year 2020 and 2019, respectively, and our previously-reported results for the nine months ended March 31, 2020 and 2019, respectively.  Our independent registered public accounting firm, BDO LLP, has not audited, reviewed, compiled, or performed any procedures with respect to our results for the fourth quarter of fiscal year 2020 or 2019.

Non-GAAP Financial Measures

We provide non-GAAP financial measures in addition to reported IFRS results prepared in accordance with IFRS. Management believes these measures help illustrate underlying trends in ibex's business and uses the non-GAAP financial measures to establish budgets and operational goals, for managing ibex's business and evaluating its performance. We anticipate that we will continue to report both IFRS and certain non-GAAP financial measures in our financial results. Because ibex's non-GAAP financial measures are not calculated according to IFRS, these measures are not comparable to IFRS and may not necessarily be comparable to similarly described non-GAAP measures reported by other companies within ibex's industry. Consequently, our non-GAAP financial measures should not be evaluated in isolation or replace comparable IFRS measures, but, rather, should be considered together with our unaudited consolidated statements of financial position, unaudited consolidated statements of profit or loss and other comprehensive income, and unaudited consolidated statements of cash flows presented herein and prepared in accordance with IFRS issued by IASB.

In this earnings release, we are introducing “adjusted net income / (loss) from continuing operations,” which we define as net income / (loss) from continuing operations before the effect of the following items: non-recurring expenses (including litigation and settlement expenses, costs related to COVID-19, and expenses related to our initial public offering), impairment, other income, fair value adjustment related to the Amazon warrant, share-based payments, and foreign exchange gains or losses. We believe these items are not reflective of our long-term performance. We use adjusted net income / (loss) from continuing operations internally to understand what we believe to be the recurring nature of our net income / (loss) from continuing operations and as a basis to calculate a pro forma adjusted earnings per share now that our initial public offering has been consummated. We also believe that adjusted net income / (loss) from continuing operations is widely used by investors, securities analysts and other interested parties as a supplemental measure of profitability.

ibex is not providing a quantitative reconciliation of forward-looking non-GAAP adjusted EBITDA from continuing operations to the most directly comparable IFRS measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, non-recurring expenses, fair value adjustments, share-based compensation expense, and impairment of assets. These items are uncertain, depend on various factors, and could have a material impact on IFRS reported results for the guidance period.

About ibex

ibex helps the world’s preeminent brands more effectively engage their customers with services ranging from customer support, technical support, inbound/outbound sales, business intelligence and analytics, digital demand generation, and CX surveys and feedback analytics.

Forward Looking Statements

In addition to historical information, this release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: developments relating to COVID-19; the Frontier restructuring and its proceedings under Chapter 11 of the United States Bankruptcy Code; our ability to attract new business and retain key clients; our ability to enter into multi-year contracts with our clients at appropriate rates; the potential for our clients or potential clients to consolidate; our clients deciding to enter into or further expand their insourcing activities; our ability to operate as an integrated company under the IBEX brand; our ability to manage portions of our business that have long sales cycles and long implementation cycles that require significant resources and working capital; our ability to manage our international operations, particularly in Pakistan and the Philippines and increasingly in Jamaica and Nicaragua; our ability to comply with applicable laws and regulations, including those regarding privacy, data protection and information security; our ability to manage the inelasticity of our labor costs relative to short-term movements in client demand; our ability to realize the anticipated strategic and financial benefits of our relationship with Amazon; our ability to recruit, engage, motivate, manage and retain our global workforce; our ability to anticipate, develop and implement information technology solutions that keep pace with evolving industry standards and changing client demands; our ability to maintain and enhance our reputation and brand; and other factors discussed under the heading “Risk Factors” in our final prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 10, 2020, our annual report on Form 20-F to be filed with the SEC and any other risk factors we include in subsequent reports on Form 6-K. Because of these uncertainties, you should not make any investment decisions based on our estimates and forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.

Media Contact: Rosemary Hanratty, Senior Director of Marketing, ibex, 412.539.7099, rosemary.hanratty@ibex.co

IR Contact: Brinlea Johnson, The Blueshirt Group, 415.269.2645, brinlea@blueshirtgroup.com 

IBEX LimitedUnaudited Consolidated Statements of Financial Position

US$ in thousands		June 30, 2020				June 30, 2019
Assets
Non-current assets
Goodwill		$	11,832			$	11,832
Other intangible assets			2,781				2,928
Property and equipment			84,588				82,309
Investment in joint venture			331				227
Deferred tax asset			2,223				2,517
Warrant asset			2,611				3,316
Other assets			4,834				3,398
Total non-current assets		$	109,200			$	106,527
Current assets
Trade and other receivables			62,579				71,134
Due from related parties			1,587				1,768
Cash and cash equivalents			21,870				8,873
Total current assets		$	86,036			$	81,775
Total assets		$	195,236			$	188,302
Equity and liabilities
Equity attributable to owners of the parent
Share capital		$	12			$	12
Additional paid-in capital			96,207				96,207
Other reserves			29,456				29,585
Accumulated deficit			(109,527	)			(117,176	)
Total equity		$	16,148			$	8,628
Non-current liabilities
Deferred revenue		$	434			$	753
Lease liabilities			62,044				58,602
Borrowings			3,782				7,184
Deferred tax liability			117				147
Other non-current liabilities			7,058				1,607
Total non-current liabilities		$	73,435			$	68,293
Current liabilities
Trade and other payables		$	53,213			$	46,890
Income tax payables			3,087				1,467
Lease liabilities			12,668				10,632
Borrowings			27,476				41,835
Deferred revenue			3,470				4,388
Due to related parties			5,739				6,169
Total current liabilities		$	105,653			$	111,381
Total liabilities		$	179,088			$	179,674
Total equity and liabilities		$	195,236			$	188,302

IBEX LimitedUnaudited Consolidated Statements of Profit or Loss and Other Comprehensive Income

	Quarter ended								Year ended
US$ in thousands	June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Revenue	$	100,880			$	87,915			$	405,135			$	368,380
Payroll and related costs		69,009				63,098				276,255				254,592
Share-based payments		478				48				359				4,087
Reseller commission and lead expenses		3,724				4,839				17,328				27,877
Depreciation and amortization		6,012				5,203				24,472				20,895
Other operating costs		22,391				17,004				67,208				54,124
Income / (loss) from operations		(734	)			(2,277	)			19,513				6,805
Finance expenses		(2,238	)			(2,251	)			(9,428	)			(7,709	)
Income / (loss) before taxation		(2,972	)			(4,528	)			10,085				(904	)
Income tax expense		(833	)			(119	)			(2,315	)			(3,615	)
Net income / (loss) from continuing operations		(3,805	)			(4,647	)			7,770				(4,519	)
Net income on discontinued operation, net of tax		-				8,568				-				15,484
Net income / (loss) for the year		(3,805	)			3,921				7,770				10,965
Other comprehensive income / (loss)
Item that will not be subsequently reclassified to profit or loss
Actuarial (loss) / gain on retirement benefits		(184	)			109				(184	)			109
Item that will be subsequently reclassified to profit or loss
Foreign currency translation adjustment		(211	)			(64	)			(248	)			(316	)
Cash flow hedge - changes in fair value		(518	)			-				(518	)			-
		(913	)			45				(950	)			(207	)
Total comprehensive income / (loss)	$	(4,718	)		$	3,966			$	6,820			$	10,758
Loss per share from continuing operations attributable to the ordinary equity holders of the parent
Basic loss per share	$	-			$	-			$	-			$	-
Diluted loss per share	$	(0.29	)		$	(0.37	)		$	-			$	(0.36	)
Loss per share attributable to the ordinary equity holders of the parent
Basic loss per share	$	-			$	-			$	-			$	-
Diluted loss per share	$	-			$	-			$	-			$	-

IBEX LimitedUnaudited Consolidated Statements of Cash Flows

	Quarter ended								Year ended
US$ in thousands	June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Income / (loss) before taxation	$	(2,972	)		$	5,325			$	10,085			$	19,410
Adjustments for:
Depreciation and amortization		6,012				5,498				24,472				21,805
Amortization of warrant asset		154				178				705				643
Foreign currency translation loss		(444	)			(602	)			(195	)			78
Share warrants		2,506				1				3,138				(364	)
Phantom expense		166				33				(31	)			(300	)
Share-based payments		312				30				390				5,262
Allowance of expected credit losses		123				184				224				343
Share of profit from investment in joint venture		(119	)			(39	)			(533	)			(351	)
(Gain) / loss on disposal of fixed assets		63				(99	)			(10	)			(140	)
Provision for defined benefit scheme		(13	)			129				121				129
Impairment on intangibles		777				-				777				163
Finance costs		2,239				3,747				9,429				13,383
Decrease / (Increase) in trade and other receivables		888				(1,992	)			9,042				(18,019	)
Increase in renewal receivables		-				(15,290	)			-				(35,022	)
Increase in prepayments and other assets		(35	)			(167	)			(1,435	)			(173	)
Increase in trade and other payables and other liabilities		12,027				13,130				7,106				8,997
Cash generated from operations		21,684				10,066				63,285				15,844
Interest paid		(2,239	)			(3,784	)			(9,429	)			(13,054	)
Income taxes paid		(1,379	)			(260	)			(2,137	)			(588	)
Net cash inflow from operating activities	$	18,066			$	6,022			$	51,719			$	2,202
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	$	(264	)		$	(2,910	)		$	(4,283	)		$	(5,612	)
Purchase of other intangible assets		(497	)			(78	)			(982	)			(622	)
Return on investment from joint venture		(309	)			-				-				96
Proceed from sale of assets		-				109				-				188
Cash adjustment from sale of subsidiary to parent company		-				(3,554	)			-				(3,554	)
Capital repayment from joint venture		430				144				430				420
Net cash outflow from investing activities	$	(640	)		$	(6,289	)		$	(4,835	)		$	(9,084	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit	$	20,042			$	36,515			$	127,567			$	168,674
Repayments of line of credit		(24,633	)			(36,349	)			(142,118	)			(162,851	)
Proceeds from borrowings		-				2,284				1,000				36,617
Repayment of borrowings		(3,227	)			(2,192	)			(8,033	)			(6,081	)
Repayment of related party loans		-				-				-				(1,200	)
Principal payments on lease obligations		(3,227	)			(2,895	)			(12,162	)			(10,535	)
Repayment private placement notes		-				-				-				(14,500	)
Dividend distribution		-				(1,600	)			(121	)			(1,600	)
Payment of senior preferred shares		-				-				-				(5,972	)
Net cash (outflow) / inflow from financing activities	$	(11,045	)		$	(4,237	)		$	(33,867	)		$	2,552
Effects of exchange rate difference on cash and cash equivalents		18				(60	)			(20	)			(316	)
Net increase / (decrease) in cash and cash equivalents	$	6,399			$	(4,564	)		$	12,997			$	(4,646	)
Cash and cash equivalents at beginning of the period	$	15,471			$	13,437			$	8,873			$	13,519
Cash and cash equivalents at end of the period	$	21,870			$	8,873			$	21,870			$	8,873

IBEX LimitedUnaudited Supplemental Non-GAAP Information

Reconciliation of Net Income from continuing operations to Adjusted EBITDA from continuing operations
		Quarter ended June 30,								Year ended June 30,
US$ in thousands			2020				2019				2020				2019
Net income / (loss) from continuing operations		$	(3,805	)		$	(4,647	)		$	7,770			$	(4,519	)
Finance expense			2,238				2,251				9,428				7,709
Income tax expense			833				119				2,315				3,615
Depreciation and amortization			6,012				5,203				24,472				20,895
EBITDA from continuing operations		$	5,278			$	2,926			$	43,985			$	27,700
Non-recurring expenses			5,085				4,239				6,482				4,239
Impairment			777				-				777				163
Other income			(227	)			(177	)			(745	)			(804	)
Fair value adjustment			2,506				1				3,138				(364	)
Share-based payments			478				48				359				4,087
Foreign exchange (gain) / loss			(372	)			349				151				1,274
Adjusted EBITDA from continuing operations		$	13,525			$	7,386			$	54,147			$	36,295

Reconciliation of Net income / (loss) from continuing operations to Adjusted net income / (loss) from continuing operations
		Quarter ended June 30,								Year ended June 30,
US$ in thousands			2020				2019				2020				2019
Net income / (loss) from continuing operations		$	(3,805	)		$	(4,647	)		$	7,770			$	(4,519	)
Non-recurring expenses			5,085				4,239				6,482				4,239
Impairment			777				-				777				163
Other income			(227	)			(177	)			(745	)			(804	)
Fair value adjustment			2,506				1				3,138				(364	)
Share-based payments			478				48				359				4,087
Foreign exchange (gain) / loss			(372	)			349				151				1,274
Total adjustments		$	8,247			$	4,460			$	10,162			$	8,595
Normalized tax rate*			22.9	%			26.5	%			22.9	%			26.5	%
Tax impact of adjustments			(1,889	)			(1,182	)			(2,327	)			(2,278	)
Adjusted net income / (loss) from continuing operations		$	2,553			$	(1,369	)		$	15,605			$	1,798
* The 2019 tax rate has been adjusted to remove the impact of the cancellation of the legacy ESOP plan.

Calculation of pro forma adjusted earnings per share
		Quarter ended June 30,							Year ended June 30,
US$ in thousands			2020			2019				2020			2019
Adjusted net income / (loss) from continuing operations		$	2,553		$	(1,369	)		$	15,605		$	1,798
Pro forma fully diluted shares*			18,680,377			18,680,377				18,680,377			18,680,377
Pro forma adjusted earnings / (loss) per share		$	0.14		$	(0.07	)		$	0.84		$	0.10
* Pro forma fully diluted shares outstanding immediately following our initial public offering in August 2020.

Calculation of free cash flow
		Year ended June 30,
US$ in thousands			2020				2019
Net cash inflow from operating activities		$	51,719			$	2,202
Add: Impact of discontinued operations			-				13,396
Less:
Capital expenditures			16,917				9,707
Lease payments on right-of-use assets			9,147				8,411
Free cash flow		$	25,655			$	(2,520	)

Calculation of Net Debt
US$ in thousands	June 30, 2020				June 30, 2019
Borrowings
Current	$	27,476			$	41,835
Non-Current		3,782				7,184
	$	31,258			$	49,019
Leases
Current		12,668				10,632
Non-Current		62,044				58,602
	$	74,712			$	69,234
Total Debt	$	105,970			$	118,253
Cash		21,870				8,873
Net Debt	$	84,100			$	109,380