Exela Technologies, Inc. Reports Full Year and Fourth Quarter 2022 Results

Full Year Highlights

• 2022 revenue of $1,077.2 million, down 7.7% year-over-year (5.7% on a constant currency basis)
• Net loss of $415.6 million, includes non-cash goodwill impairment charges of $171.2 million
• Implemented actions expected to achieve savings in the range of $65-$75 million beginning in Q4 2022 and into 2023
• Total debt⁽¹⁾ reduced by $141.1 million

Fourth Quarter Highlights

• Revenue of $267.0 million, down 9.3% year-over-year (7.3% on a constant currency basis)
• Net loss of $194.1 million, includes non-cash goodwill impairment charges of $141.6 million

Conference call scheduled for April 3, 2023 at 4:30 PM ET

IRVING, Texas, April 03, 2023 (GLOBE NEWSWIRE) -- Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA, XELAP), a global business process automation (“BPA”) leader, announced today its financial results for the full year and fourth quarter ended December 31, 2022.

“We continue to make operational improvements across the organization in the face of heightened inflation and the evolving hybrid work environment. Exelarators are working nonstop to offer the best solutions for customers. Internally, we are also focusing on continuing to improve the balance sheet and lowering our cost of capital, even as rates are driven higher by central banks. It’s been a tough, but productive year,” said Par Chadha, Executive Chairman of Exela.

Full Year Highlights

• Revenue: Revenue for 2022 was $1,077.2 million, a decline of 7.7% compared to $1,166.6 million in 2021 due to rising costs, a tight job market, business mix, rising dollar and onetime events.
  • Revenue for the Information and Transaction Processing Solutions (“ITPS”) segment was $765.1 million, a decline of 12.5% year-over-year, primarily due to a network outage⁽²⁾ impacting contracted revenues, currency translation, and staffing shortages.
  • Healthcare Solutions revenue was $239.3 million, an increase of 9.9% year-over-year, led by continuing acceptance of our solutions and services.
  • Legal and Loss Prevention Services revenue was $72.8 million, a decrease of 2.4% year-over-year.

Operating income/(loss): Operating loss for 2022 was $228.8 million, compared with operating income of $21.4 million in 2021. The year over year change was due to the gross profit decline of $77.8 million and goodwill impairment charges of $171.2 million.

• Net Loss: Net loss for 2022 was $415.6 million, compared with a net loss of $142.4 million in 2021. The year over year increase was primarily due to the changes in the operating loss including goodwill impairment charges and changes in non-cash debt extinguishment charges. Additionally, we implemented actions expected to achieve savings in the range of $65-$75 million beginning in Q4 2022 and into 2023.
  
  
  • EBITDA⁽³⁾: EBITDA for 2022 was a loss of $174.7 million compared to $114.5 million in 2021. EBITDA margin for 2022 was (16.2%) compared to 9.8% in 2021.
  • Adjusted EBITDA⁽⁴⁾: Adjusted EBITDA for 2022 was $139.9 million, a decrease of 19.3% compared to $173.3 million in 2021. Adjusted EBITDA margin for 2022 was 13.0%, a decrease of 187 basis points from 14.9% in 2021.

• Capital Expenditures: Capital expenditures for 2022 were 2.0% of revenue compared to 1.4% of revenue in 2021.
  

Maintaining financial flexibility: Raised a total of $276 million in gross proceeds from equity offerings in 2022. Total debt⁽¹⁾ decreased by $141.1 million compared to 2021.

Fourth Quarter Highlights

• Revenue: Revenue for Q4 2022 was $267.0 million, a decline of 9.3% compared to $294.3 million in Q4 2021.
  • Revenue for the Information and Transaction Processing Solutions (“ITPS”) segment was $184.8 million, a decline of 14.7% year-over-year, primarily due to a network outage impacting contracted revenues, currency translation and staffing shortages.
  • Healthcare Solutions revenue was $65.3 million, an increase of 15.6% year-over-year, led by continuing acceptance of our solutions and services.
  • Legal and Loss Prevention Services revenue was $16.8 million, a decrease of 20.4% year-over-year.

Operating income/(loss): Operating loss for Q4 2022 was $153.1 million, compared with operating loss of $10.7 million in Q4 2021. The year over year increase in the operating loss was due to the gross profit decline and goodwill impairment charge of $141.6 million offset by lower SG&A costs.

• Net Loss: Net loss for Q4 2022 was $194.1 million, compared with a net loss of $70.6 million in Q4 2021. The year over year increase was primarily due to the changes in the operating loss including goodwill impairment charges.
  
  
  • EBITDA: EBITDA for Q4 2022 was a loss of $135.8 million compared to a loss of $3.1 million in Q4 2021. EBITDA margin for Q4 2022 was (50.9%) compared to (1.0%) in Q4 2021.
    
  • Adjusted EBITDA: Adjusted EBITDA for Q4 2022 was $35.5 million, a decrease of 10.2% compared to $39.5 million in Q4 2021. Adjusted EBITDA margin for Q4 2022 was 13.3%, a decrease of 14 basis points from 13.4% in Q4 2021.

• Capital Expenditures: Capital expenditures for Q4 2022 were 1.9% of revenue compared to 2.9% of revenue in Q4 2021.
  

Maintaining financial flexibility: Raised a total of $31.3 million in gross proceeds from equity offerings in Q4 2022. Total debt decreased by $12.1 million compared to Q3 2022.

Below are the notes referenced above:
(1) Total debt includes all long-term debt and interest-bearing current liabilities
(2) In June 2022, the Company experienced a network security incident impacting certain of the Company’s operational and information technology systems. The Company immediately took steps to isolate the impact and prevent additional systems from being affected, including taking large parts of its network offline as a precaution and thereby disrupting some access to our applications and services by our employees and customers. The Company’s systems recovery efforts are complete, and the Company’s operations are fully functional, however, the incident did result in some loss of revenue at the end of the second quarter and in the third quarter well as certain incremental costs, some of which are expected to continue.
(3) EBITDA is a non-GAAP measure. A reconciliation of EBITDA is attached to this release.
(4) Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.

Earnings Conference Call and Audio Webcast

Exela will host a conference call to discuss its fourth quarter and full year 2022 financial results at 4:30 PM ET on April 3, 2023. To access this call, dial 833-255-2831 or +1-412-902-6724 (international). The password for the call is “Exela Earnings Call”.

Shortly after the conclusion of the call, a replay will be available through April 10, 2023 at 877-344-7529 or +1-412-317-0088 (international). The replay passcode is 9773416. A replay will also be archived on the Exela investor relations website at http://investors.exelatech.com.

Exela invites all investors to ask questions that they would like addressed on the conference call. We ask investors to submit questions via email to IR@exelatech.com.

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 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 experience 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. Utilizing foundational technologies spanning information management, workflow automation, and integrated communications, Exela’s software and services include multi-industry, departmental solution suites addressing finance and accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and the public sector. Through cloud-enabled platforms, built on a configurable stack of automation modules, and approximately 16,000 employees operating in 21 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner

Find out more at www.exelatech.com 

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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.

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 the network outage described in this press release and those discussed under the heading “Risk Factors” in our Annual Report and in subsequent filings with the U.S. Securities and Exchange Commission (“SEC”). In addition, forward-looking statements provide Exela’s expectations, plans or forecasts of future events and views as of the date of this communication. Exela anticipates that subsequent events and developments will cause Exela’s assessments to change. These forward-looking statements should not be relied upon as representing Exela’s assessments as of any date subsequent to the date of this press release.

For more Exela news, commentary, and industry perspectives, visit:

Website: https://investors.exelatech.com/

Twitter: @ExelaTech

LinkedIn: /exela-technologies

Facebook: @exelatechnologies

Instagram: @exelatechnologies

The information posted on the Company's website and/or via its social media accounts may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website and its social media accounts in addition to the Company's press releases, SEC filings and public conference calls and webcasts.

Investor and/or Media Contacts:
Vincent Kondaveeti
E: vincent.kondaveeti@exelatech.com

Mary Beth Benjamin
E: IR@exelatech.com

Source: Exela Technologies, Inc.

Exela Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
        For the years ended December 31, 2022 and 2021
(in thousands of United States dollars except share and per share amounts)

Exela Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the years ended December 31, 2022, 2021 and 2020
(in thousands of United States dollars except share and per share amounts)

Exela Technologies, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
For the years ended December 31, 2022, 2021 and 2020
(in thousands of United States dollars except share and per share amounts)

Exela Technologies
Schedule 1: Fourth Quarter 2022 vs. Third Quarter 2022
Financial Performance
(Unaudited)

Exela Technologies
Schedule 2: Reconciliation of Adjusted EBITDA and constant currency revenues

Source: Exela Technologies, Inc.