Second Quarter Highlights
- Revenue of
$245.7 million , down 10.0% year-over-year - Gross margin of 23.5%, up 120 bps year-over-year
- Interest expense of
$23.1 million , down 48.7% year-over-year - SG&A of
$41.8 million , up 30.5% year-over-year - Operating loss of
$2.4 million , vs$11.2 million operating profit, year-over-year - Net loss of
$26.9 million ($25.7 million attributable toExela Technologies, Inc. ), an improvement of$4.0 million year-over-year - Adjusted EBITDA of
$13.7 million , down 39.0% year-over-year
“Our increased operating leverage and continued focus on cost management and rationalization of our real estate footprint are reflected in the solid expansion of our gross margin. We continue to add new logos and remain cautiously optimistic as we head into the second half of the year,” noted Par Chadha, Executive Chairman.
- Revenue: Revenue for 2Q 2024 was
$245.7 million , a decline of 10.0% compared to$272.9 million in 2Q 2023 (or a decline of 9.3% when excluding the sale of the high-speed scanner business in June 2023).- Revenue for the Information and Transaction Processing Solutions segment was
$156.8 million , a decline of 15.2% year-over-year (or a decline of 14.0% on a pro forma basis when adjusted for the sale of the high-speed scanner business that occurred in June 2023). - Healthcare Solutions generated
$62.9 million in revenue, a 1.1% decline year-over-year. - Legal &
Loss Prevention Services generated$25.9 million in revenue, a 6.3% increase year-over-year.
- Revenue for the Information and Transaction Processing Solutions segment was
- Gross margin of 23.5%, up 1.2% year-over-year due to lower costs.
- Interest Expense of
$23.1M , down 48.7% year-over-year due to the Company’s debt modification inJuly 2023 . - SG&A of
$41.8M , up 30.5% year-over-year due to profit on the sale of our high-speed scanner business of$6.6M recognized in 2Q 2023. Other SG&A expenses were higher by$9.0 million , due to$10.1 in Q2FY24 write-downs, predominantly driven by a partner contract amendment, which provides for higher pricing and service expansion but resulted in a non-cash write down of the original contract’s straight-line revenue recognition and related contract assets. The SG&A increase was further offset by lower legal and professional fees and employee related costs. - Operating Loss: Operating loss of
$2.4 million , versus an Operating profit of$11.2 million in 2Q 2023, primarily driven by lower revenue and higher SG&A, partially offset by higher gross profits. - Net Loss: Net loss of
$26.9 million ($25.7 million attributable toExela Technologies, Inc. ), an improvement of$4.0 million year-over-year, primarily driven by lower interest expense following debt modification inJuly 2023 , partially offset by higher SG&A. - Adjusted EBITDA(1): Adjusted EBITDA was
$13.7 million compared to$22.5 million in 2Q 2023, a decline of 39.0% year-over-year, while up 6.7% sequentially. Adjusted EBITDA margin was 5.6%, a decrease of 260 basis points from 2Q 2023.
Below is the note referenced above:
(1) Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.
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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
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
Website: https://investors.exelatech.com/
X: @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,
Investor and/or Media Contacts:
ir@exelatech.com
Condensed Consolidated Balance Sheets As of (in thousands of |
|||||||||
2024 | 2023 | ||||||||
(Unaudited) | (Audited) | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 30,327 | $ | 23,341 | |||||
Restricted cash | 20,933 | 43,812 | |||||||
Accounts receivable, net of allowance for credit losses of |
61,501 | 76,893 | |||||||
Related party receivables and prepaid expenses | 449 | 296 | |||||||
Inventories, net | 13,251 | 11,502 | |||||||
Prepaid expenses and other current assets | 30,140 | 25,364 | |||||||
Total current assets | 156,601 | 181,208 | |||||||
Property, plant and equipment, net of accumulated depreciation of |
58,448 | 58,366 | |||||||
Operating lease right-of-use assets, net | 31,421 | 33,874 | |||||||
170,354 | 170,452 | ||||||||
Intangible assets, net | 148,364 | 164,920 | |||||||
Deferred income tax assets | 2,990 | 3,043 | |||||||
Other noncurrent assets | 19,775 | 24,474 | |||||||
Total assets | $ | 587,953 | $ | 636,337 | |||||
Liabilities and Stockholders' Deficit | |||||||||
Liabilities | |||||||||
Current liabilities | |||||||||
Current portion of long-term debt | $ | 53,723 | $ | 30,029 | |||||
Accounts payable | 68,628 | 61,109 | |||||||
Related party payables | 3,047 | 1,938 | |||||||
Income tax payable | 4,211 | 2,080 | |||||||
Accrued liabilities | 57,611 | 63,699 | |||||||
Accrued compensation and benefits | 71,192 | 65,012 | |||||||
Accrued interest | 55,776 | 52,389 | |||||||
Customer deposits | 27,898 | 23,838 | |||||||
Deferred revenue | 14,018 | 12,099 | |||||||
Obligation for claim payment | 38,913 | 66,988 | |||||||
Current portion of finance lease liabilities | 6,422 | 4,856 | |||||||
Current portion of operating lease liabilities | 9,590 | 10,845 | |||||||
Total current liabilities | 411,029 | 394,882 | |||||||
Long-term debt, net of current maturities | 1,015,252 | 1,030,580 | |||||||
Finance lease liabilities, net of current portion | 8,203 | 5,953 | |||||||
Pension liabilities, net | 12,879 | 13,192 | |||||||
Deferred income tax liabilities | 12,516 | 11,692 | |||||||
Long-term income tax liabilities | 6,511 | 6,359 | |||||||
Operating lease liabilities, net of current portion | 24,676 | 26,703 | |||||||
Other long-term liabilities | 5,621 | 5,811 | |||||||
Total liabilities | 1,496,687 | 1,495,172 | |||||||
Commitments and Contingencies (Note 8) | |||||||||
Stockholders' deficit | |||||||||
Common Stock, par value of |
261 | 261 | |||||||
Preferred stock, |
|||||||||
Series A Preferred Stock, 2,778,111 shares issued and outstanding at |
1 | 1 | |||||||
Series B Preferred Stock, 3,029,900 shares issued and outstanding at |
— | — | |||||||
Additional paid in capital | 1,237,687 | 1,236,171 | |||||||
Accumulated deficit | (2,134,670 | ) | (2,084,114 | ) | |||||
Accumulated other comprehensive loss: | |||||||||
Foreign currency translation adjustment | (7,282 | ) | (7,648 | ) | |||||
Unrealized pension actuarial gains (losses), net of tax | 215 | (174 | ) | ||||||
Total accumulated other comprehensive loss | (7,067 | ) | (7,822 | ) | |||||
Total stockholders’ deficit attributable to |
(903,788 | ) | (855,503 | ) | |||||
Noncontrolling interest in XBP Europe | (4,946 | ) | (3,332 | ) | |||||
Total stockholders’ deficit | (908,734 | ) | (858,835 | ) | |||||
Total liabilities and stockholders’ deficit | $ | 587,953 | $ | 636,337 |
Condensed Consolidated Statements of Operations For the three and six months ended (in thousands of United States dollars except share and per share amounts) (Unaudited) |
||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Revenue | $ | 245,653 | $ | 272,938 | $ | 504,464 | $ | 546,558 | ||||||||
Cost of revenue (exclusive of depreciation and amortization) | 187,964 | 212,059 | 389,952 | 428,526 | ||||||||||||
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 41,778 | 32,026 | 82,632 | 76,407 | ||||||||||||
Depreciation and amortization | 14,983 | 14,890 | 28,490 | 31,450 | ||||||||||||
Related party expense | 3,282 | 2,739 | 5,673 | 5,851 | ||||||||||||
Operating profit (loss) | (2,354 | ) | 11,224 | (2,283 | ) | 4,324 | ||||||||||
Other expense (income), net: | ||||||||||||||||
Interest expense, net | 23,129 | 45,092 | 44,217 | 89,272 | ||||||||||||
Debt modification and extinguishment costs (gain), net | — | (6,785 | ) | — | (15,558 | ) | ||||||||||
Sundry (income) expense, net | (204 | ) | 1,500 | 1,677 | 2,248 | |||||||||||
Other income, net | (423 | ) | (232 | ) | (874 | ) | (514 | ) | ||||||||
Loss before income taxes | (24,856 | ) | (28,351 | ) | (47,303 | ) | (71,124 | ) | ||||||||
Income tax expense | (2,049 | ) | (2,535 | ) | (5,175 | ) | (5,198 | ) | ||||||||
Net loss | (26,905 | ) | (30,886 | ) | (52,478 | ) | (76,322 | ) | ||||||||
Net loss attributable to noncontrolling interest in XBP Europe, net of taxes | (1,228 | ) | — | (1,922 | ) | — | ||||||||||
Net loss attributable to |
$ | (25,677 | ) | $ | (30,886 | ) | $ | (50,556 | ) | $ | (76,322 | ) | ||||
Cumulative dividends for Series A Preferred Stock | (1,067 | ) | (967 | ) | (2,120 | ) | (1,921 | ) | ||||||||
Cumulative dividends for Series B Preferred Stock | (1,242 | ) | (1,171 | ) | (2,466 | ) | (2,324 | ) | ||||||||
Net loss attributable to common stockholders | $ | (27,986 | ) | $ | (33,024 | ) | $ | (55,142 | ) | $ | (80,567 | ) | ||||
Loss per share: | ||||||||||||||||
Basic and diluted | $ | (4.40 | ) | $ | (5.19 | ) | $ | (8.66 | ) | $ | (14.40 | ) |
Condensed Consolidated Statements of Cash Flows For the six months ended (in thousands of |
|||||||||
Six Months Ended |
|||||||||
2024 | 2023 |
||||||||
Cash flows from operating activities | |||||||||
Net loss | $ | (52,478 | ) | $ | (76,322 | ) | |||
Adjustments to reconcile net loss to cash used in operating activities | |||||||||
Depreciation and amortization | 28,490 | 31,450 | |||||||
Original issue discount, debt premium and debt issuance cost amortization | (20,022 | ) | 16,064 | ||||||
Interest on BR Exar AR Facility | (2,558 | ) | (5,066 | ) | (1) | ||||
Debt modification and extinguishment gain, net | — | (16,964 | ) | ||||||
Credit loss expense | 14,683 | 2,865 | |||||||
Deferred income tax provision | 757 | 776 | |||||||
Share-based compensation expense | 1,560 | 314 | |||||||
Unrealized foreign currency (gain) loss | (131 | ) | 521 | ||||||
Gain on sale of assets | (533 | ) | (5,831 | ) | |||||
Fair value adjustment for private warrants liability of XBP Europe | (40 | ) | — | ||||||
Change in operating assets and liabilities | |||||||||
Accounts receivable | 6,379 | (7,703 | ) | ||||||
Prepaid expenses and other current assets | (6,842 | ) | 6,495 | ||||||
Accounts payable and accrued liabilities | 13,427 | (639 | ) | ||||||
Related party payables | 955 | (403 | ) | ||||||
Additions to outsource contract costs | (573 | ) | (298 | ) | |||||
Net cash used in operating activities | (16,926 | ) | (54,741 | ) | |||||
Cash flows from investing activities | |||||||||
Purchase of property, plant and equipment | (4,033 | ) | (3,357 | ) | |||||
Additions to internally developed software | (1,947 | ) | (1,976 | ) | |||||
Proceeds from sale of assets | 2,893 | 29,811 | |||||||
Net cash (used in) provided by investing activities | (3,087 | ) | 24,478 | ||||||
Cash flows from financing activities | |||||||||
Proceeds from issuance of Common Stock from at the market offerings | — | 69,260 | |||||||
Cash paid for equity issuance costs from at the market offerings | — | (2,232 | ) | ||||||
Payment for fractional shares on reverse stock split | — | (31 | ) | ||||||
Borrowings under factoring arrangement and Securitization Facility | 496 | 62,858 | |||||||
Principal repayment on borrowings under factoring arrangement and Securitization Facility | (511 | ) | (63,577 | ) | |||||
Cash paid for debt issuance costs | (237 | ) | (6,398 | ) | |||||
Principal payments on finance lease obligations | (3,837 | ) | (2,150 | ) | |||||
Borrowings from senior secured term loans and BRCC revolver | — | 9,600 | |||||||
Borrowings from other loans | 20,594 | 4,289 | (1) | ||||||
Cash paid for debt repurchases | — | (11,858 | ) | ||||||
Proceeds from Second |
— | 31,500 | |||||||
Borrowing under BR Exar AR Facility | 30,614 | 20,000 | (1) | ||||||
Repayments under BR Exar AR Facility | (25,580 | ) | (12,484 | ) | (1) | ||||
Repayment of BRCC term loan | — | (44,775 | ) | ||||||
Principal repayments on senior secured term loans, BRCC revolver and other loans | (17,763 | ) | (15,441 | ) | (1) | ||||
Net cash provided by financing activities | 3,776 | 38,561 | |||||||
Effect of exchange rates on cash, restricted cash and cash equivalents | 344 | 145 | |||||||
Net (decrease) increase in cash, restricted cash and cash equivalents | (15,893 | ) | 8,443 | ||||||
Cash, restricted cash, and cash equivalents | |||||||||
Beginning of period | 67,153 | 45,067 | |||||||
End of period | $ | 51,260 | $ | 53,510 | |||||
Supplemental cash flow data: | |||||||||
Income tax payments, net of refunds received | $ | 1,978 | $ | 2,898 | |||||
Interest paid | 38,694 | 72,608 | |||||||
Noncash investing and financing activities: | |||||||||
Assets acquired through right-of-use arrangements | $ | 7,673 | $ | 405 | |||||
Accrued PIK interest paid through issuance of PIK Notes | 23,342 | — | |||||||
Waiver and consent fee payable added to outstanding balance of Senior Secured Term Loan | 1,000 | — | |||||||
Accrued capital expenditures | 288 | 2,167 |
(1) Exela restated the condensed consolidated statement of cash flows for the six months ended
Schedule 1: Reconciliation of Adjusted EBITDA and constant currency revenues |
|||||||||||||||||
Non-GAAP constant currency revenue reconciliation | |||||||||||||||||
($ in millions) | Three months ended |
Year ended (YTD) |
|||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||
Revenues, as reported (GAAP) | $245.7 | $272.9 | $504.5 | $546.6 | |||||||||||||
Foreign currency exchange impact (1) | 0.3 | 0.4 | (0.4 | ) | 3.6 | ||||||||||||
Revenues, at constant currency (Non-GAAP) | $246.0 | $273.3 | $504.1 | $550.2 |
(1) Constant currency excludes the impact of foreign currency fluctuations and is computed by applying the average exchange rates for the three months and six months ended
Reconciliation of Adjusted EBITDA
($ in millions) | Three months ended |
Year ended (YTD) |
||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net loss (GAAP) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income tax expense | 2.0 | 2.5 | 5.2 | 5.2 | ||||||||||||
Interest expense, net | 23.1 | 45.1 | 44.2 | 89.3 | ||||||||||||
Depreciation and Amortization | 15.0 | 14.9 | 28.5 | 31.5 | ||||||||||||
EBITDA (Non-GAAP) | $13.3 | $31.6 | $25.4 | $49.6 | ||||||||||||
Transaction and integration costs | 0.0 | 2.9 | 0.2 | 8.1 | ||||||||||||
Non-cash equity compensation | 0.4 | 0.2 | 1.6 | 0.3 | ||||||||||||
Other charges including non-cash | - | 0.3 | - | 0.2 | ||||||||||||
Loss/(gain) on sale of assets | 0.1 | 0.7 | (0.5 | ) | 0.8 | |||||||||||
Loss/(gain) on business disposals | - | (6.5 | ) | - | (6.5 | ) | ||||||||||
Debt modification and extinguishment costs (gain), net | - | (6.8 | ) | - | (15.6 | ) | ||||||||||
Adjusted EBITDA | $13.7 | $22.5 | $26.6 | $37.0 |
Source:
![](https://ml.globenewswire.com/media/OWRkMGNiNzUtZGQyYS00YjgwLTk0MDktMzM4ZTA4YTU5MTljLTEwOTc3Mjc=/tiny/Exela-Technologies-Inc-.png)
Source: Exela Technologies, Inc.