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Exela Technologies Holdings, Inc. Reports Full Year 2023 Results

  • 2023 revenue of $1,064.1 million, down 1.2% year-over-year
  • Gross margin of 21.7% in 2023 vs 18.5% in 2022
  • Operating profit of $8.1 million, up $236.8 million due to increased gross margin, lower SG&A and no impairments in 2023 versus 2022
  • Net loss of $124.4 million ($125.1 attributable to Exela Technologies Inc), an improvement of $291.4 million year-over-year
  • Certain of the Company’s subsidiaries issued approximately $764.8 million of aggregate principal amount of new notes in exchange for $956.0 million of aggregate principal amount of existing 2026 notes in 2023

IRVING, Texas, April 04, 2024 (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 ended December 31, 2023.

“2023 was a challenging year with focus on stabilizing revenues and recovering from the effects of our network outage in 2022. We made significant improvement to our balance sheet, eliminating current liabilities, and reducing our overall debt and interest expense under a difficult macro environment and uncertain outlook. We maintained our focus on cost management and leveraging automation, and have 2023 initiatives in process continuing into 2024 to achieve our margin improvement goals. Late in the year, we made investments to position the Company for future growth by entering into cyber security, data modernization, cloud and Infrastructure-as-a-Service, in addition to previously announced investments in FAO and data science. We completed the public listing on Nasdaq of XBP Europe, our European business. We also made significant investments in people. We improved gross margins and operating income, however we did not accomplish all of our goals in 2023 and have room to grow,” said Par Chadha, Executive Chairman of Exela Technologies.

Full Year Highlights

  • Revenue: Revenue for 2023 was $1,064.1 million, a decline of 1.2% compared to $1,077.2 million in 2022
    • Revenue for the Information and Transaction Processing Solutions segment was $732.3 million, a decline of 4.3% year-over-year
    • Healthcare Solutions generated $251.4 million, a 5.0% increase year-over-year
    • Legal and Loss Prevention Services generated $80.4 million in revenue, a 10.6% increase year-over-year
  • Operating profit: Operating profit in 2023 was $8.0 million, up $236.8 million compared with an operating loss of $228.8 million in 2022. Higher gross margin from technology advancements, lower SG&A with reductions in professional services and facility expenses, and a lack of goodwill impairment contributed to the profit improvement on a year-over-year basis.    
  • Net Loss: Net loss for 2023 was $124.4 million ($125.1 attributable to Exela Technologies Inc), an improvement of $291.4 million compared with a net loss of $415.6 million in 2022. The year over year decrease was materially driven by improvements in operating profit, lower interest expense and a gain on debt modification and extinguishment costs relative 2022.
  • Adjusted EBITDA(1): Adjusted EBITDA for 2023 was $60.0 million compared to $56.8 million in 2022. Adjusted EBITDA margin for 2023 was 5.6%, an increase of 30 basis points from 2022.
  • Capital Expenditures: Capital expenditures for 2023 were 1.1% of revenue compared to 2% of revenue in 2022 as we continue to migrate from capital intensive infrastructure to cloud computing, by making investments in our platforms and operations.

Below is the note referenced above:
(1) Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.

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 14,100 employees operating in 20 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner.

To automatically receive Exela financial news by e-mail, please visit the Exela Investor Relations website, http://investors.exelatech.com/, and subscribe to E-mail Alerts. 

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/
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, SEC filings and public conference calls and webcasts.

Investor and/or Media Contacts:
Vincent Kondaveeti

E: vincent.kondaveeti@exelatech.com

Exela Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2023 and 2022
(in thousands of United States dollars except share and per share amounts)
       
  December 31
  2023
  2022
Assets          
Current assets          
Cash and cash equivalents $ 23,341     $ 15,073  
Restricted cash   43,812       29,994  
Accounts receivable, net of allowance for credit losses of $6,628 and $6,402, respectively   76,893       101,616  
Related party receivables and prepaid expenses   296       759  
Inventories, net   11,502       16,848  
Prepaid expenses and other current assets   25,364       26,206  
Total current assets   181,208       190,496  
Property, plant and equipment, net of accumulated depreciation of $213,142 and $207,520, respectively   58,366       71,694  
Operating lease right-of-use assets, net   33,874       40,734  
Goodwill   170,452       186,802  
Intangible assets, net   164,920       200,982  
Deferred income tax assets   3,043       1,483  
Other noncurrent assets   24,474       29,721  
Total assets $ 636,337     $ 721,912  
           
Liabilities and Stockholders' Deficit          
Liabilities          
Current liabilities          
Current portion of long-term debt $ 30,029     $ 154,802  
Accounts payable   61,109       79,249  
Related party payables   1,938       2,473  
Income tax payable   2,080       2,045  
Accrued liabilities   63,699       61,340  
Accrued compensation and benefits   65,012       54,143  
Accrued interest   52,389       60,901  
Customer deposits   23,838       16,955  
Deferred revenue   12,099       16,405  
Obligation for claim payment   66,988       44,380  
Current portion of finance lease liabilities   4,856       5,485  
Current portion of operating lease liabilities   10,845       11,867  
Total current liabilities   394,882       510,045  
Long-term debt, net of current maturities   1,030,580       942,035  
Finance lease liabilities, net of current portion   5,953       9,448  
Pension liabilities, net   13,192       16,917  
Deferred income tax liabilities   11,692       11,180  
Long-term income tax liabilities   6,359       2,742  
Operating lease liabilities, net of current portion   26,703       31,030  
Other long-term liabilities   5,811       6,104  
Total liabilities   1,495,172       1,529,501  
Commitments and Contingencies (Note 14)          
Stockholders' deficit          
Common Stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 6,365,353 shares issued and outstanding at December 31, 2023 and 1,393,889 shares issued and 1,393,276 shares outstanding at December 31, 2022   261       162  
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized at December 31, 2023 and December 31, 2022, respectively          
Series A Preferred Stock, 2,778,111 shares issued and outstanding at December 31, 2023 and December 31, 2022   1       1  
Series B Preferred Stock, 3,029,900 shares issued and outstanding at December 31, 2023 and 0 shares issued and outstanding at December 31, 2022          
Additional paid in capital   1,179,098       1,102,619  
Less: Common Stock held in treasury, at cost; 0 shares at December 31, 2023 and 612 shares at December 31, 2022         (10,949 )
Equity-based compensation   57,073       56,958  
Accumulated deficit   (2,084,114 )     (1,948,009 )
Accumulated other comprehensive loss:          
Foreign currency translation adjustment   (7,648 )     (4,788 )
Unrealized pension actuarial losses, net of tax   (174 )     (3,583 )
Total accumulated other comprehensive loss   (7,822 )     (8,371 )
Total stockholders’ deficit attributable to Exela Technologies, Inc.   (855,503 )     (807,589 )
Noncontrolling interest in XBP Europe   (3,332 )      
Total stockholders’ deficit   (858,835 )     (807,589 )
Total liabilities and stockholders’ deficit $ 636,337     $ 721,912  

The accompanying notes are an integral part of these consolidated financial statements.

Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
For the years ended December 31, 2023 and 2022
(in thousands of United States dollars except share and per share amounts)
           
  Years ended December 31
  2023
  2022
Revenue $ 1,064,124     $ 1,077,157  
Cost of revenue (exclusive of depreciation and amortization)   833,422       877,474  
Selling, general and administrative expenses (exclusive of depreciation and amortization)   150,672       176,524  
Depreciation and amortization   60,535       71,831  
Impairment of goodwill and other intangible assets         171,182  
Related party expense   11,444       8,923  
Operating profit (loss)   8,051       (228,777 )
Other expense (income), net:          
Interest expense, net   139,656       164,870  
Debt modification and extinguishment costs (gain), net   (16,129 )     4,522  
Sundry expense (income), net   973       (957 )
Other expense (income), net   (884 )     14,170  
Loss before income taxes   (115,565 )     (411,382 )
Income tax expense   (8,868 )     (4,199 )
Net loss   (124,433 )     (415,581 )
Net profit (loss) attributable to noncontrolling interest in XBP Europe, net of taxes   723        
Net loss attributable to Exela Technologies, Inc. $ (125,156 )   $ (415,581 )
Cumulative dividends for Series A Preferred Stock   (3,961 )     (3,588 )
Cumulative dividends for Series B Preferred Stock   (4,718 )     (3,665 )
Net loss attributable to common stockholders $ (133,835 )   $ (422,834 )
Loss per share:          
Basic and diluted $ (22.37 )   $ (1,372.98 )

The accompanying notes are an integral part of these consolidated financial statements.

Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2023 and 2022
(in thousands of United States dollars unless otherwise stated)
           
  Years ended December 31
  2023   2022
Cash flows from operating activities          
Net loss $ (124,433 )   $ (415,581 )
Adjustments to reconcile net loss          
Depreciation and amortization   60,535       71,831  
Original issue discount, debt premium and debt issuance cost amortization   5,411       15,261  
Interest paid on BR Exar AR Facility   (10,754 )      
Debt modification and extinguishment gain, net   (17,534 )     (1,803 )
Impairment of goodwill and other intangible assets         171,182  
Impairment of operating lease right-of-use assets   1,942        
Credit loss expense   4,486       1,573  
Deferred income tax provision   (1,048 )     147  
Share-based compensation expense   115       970  
Unrealized foreign currency gain   (70 )     (1,288 )
(Gain) loss on sale of assets   (7,044 )     707  
Fair value adjustment for private warrants liability of XBP Europe   597        
Change in operating assets and liabilities          
Accounts receivable   22,729       77,650  
Prepaid expenses and other current assets   5,523       (7,813 )
Accounts payable and accrued liabilities   63,711       (520 )
Related party payables   (71 )     945  
Additions to outsource contract costs   (539 )     (423 )
Net cash provided by (used in) operating activities   3,556       (87,162 )
Cash flows from investing activities          
Purchase of property, plant and equipment   (8,075 )     (18,299 )
Additions to patents         (15 )
Additions to internally developed software   (3,818 )     (3,650 )
Proceeds from sale of assets   29,811       194  
Net cash provided by (used in) investing activities   17,918       (21,770 )
Cash flows from financing activities          
Proceeds from issuance of Common Stock from private placement         55  
Proceeds from issuance of Common Stock from at the market offerings   69,260       276,337  
Cash received in exchange for the issuance of noncontrolling interest shares in XBP Europe   5,205        
Cash paid for equity issuance costs from at the market offerings   (2,232 )     (9,482 )
Dividend paid on Series B Preferred Stock         (2,532 )
Payment for fractional shares on reverse stock split   (31 )      
Repurchases of Common Stock for retirement         (487 )
Borrowings under factoring arrangement and Securitization Facility   88,396       123,353  
Principal repayment on borrowings under factoring arrangement and Securitization Facility   (92,536 )     (216,812 )
Cash paid for withholding taxes on vested RSUs         (135 )
Lease terminations         3  
Cash paid for debt issuance costs   (8,496 )     (7,125 )
Principal payments on finance lease obligations   (4,570 )     (5,523 )
Borrowings from senior secured revolving facility and BRCC revolver   9,600       20,000  
Repayments on senior secured revolving facility         (49,477 )
Proceeds from issuance of July 2026 Notes         70,269  
Borrowings from other loans   8,709       10,095  
Cash paid for debt repurchases   (11,858 )     (4,712 )
Proceeds from Senior secured term loan   40,000        
Proceeds from Second Lien Note   31,500        
Borrowing under BR Exar AR Facility   42,539        
Repayments under BR Exar AR Facility   (42,546 )      
Repayment of BRCC term loan   (48,529 )     (66,471 )
Principal repayments on senior secured term loans and other loans   (83,787 )     (30,717 )
Net cash provided by financing activities   624       106,639  
Effect of exchange rates on cash, restricted cash and cash equivalents   (12 )     (700 )
Net increase (decrease) in cash, restricted cash and cash equivalents   22,086       (2,993 )
Cash, restricted cash, and cash equivalents          
Beginning of period   45,067       48,060  
End of period $ 67,153     $ 45,067  
Supplemental cash flow data:          
Income tax payments, net of refunds received $ 5,494     $ 5,790  
Interest paid   111,835       98,602  
Noncash investing and financing activities:          
Assets acquired through right-of-use arrangements $ 405     $ 4,790  
Issuance of April 2026 Notes in exchange of July 2026 Notes   764,800        
Issuance of April 2026 Notes in exchange of 2023 term loan   2,963        
Accrued PIK interest paid through issuance of PIK Notes   44,146        
Common Stock exchanged for Series B Preferred Stock         6  
Accrued liability for true-up obligation settled through the issuance of July 2026 Notes         10,351  
Accrued capital expenditures   2,261       1,851  

The accompanying notes are an integral part of these consolidated financial statements.

Exela Technologies, Inc. and Subsidiaries
Schedule 1: Reconciliation of Adjusted EBITDA and constant currency revenues
           
  Year Ended December 31
  2023
  2022
Net Loss $ (124,433 )   $ (415,581 )
Taxes   8,868       4,199  
Interest expense   139,656       164,870  
Depreciation and amortization   60,535       71,831  
EBITDA   84,626       (174,681 )
Transaction and integration costs (1)   6,172       18,586  
Non-cash equity compensation (2)   115       985  
Other charges including non-cash (3)   (12,991 )     35,932  
Loss/(gain) on sale of assets (4)   1,105       1,357  
Loss/(gain) on business disposals (5)   (7,223 )      
Debt modification and extinguishment costs (gain), net   (16,129 )     4,522  
Loss/(gain) on derivative instruments         (1,091 )
Exit costs related to China operations   1,850        
XBP Europe related de-SPAC costs   2,478        
Impairment of goodwill, other intangible assets         171,182  
Adjusted EBITDA $ 60,003     $ 56,792  

(1) Represents non-recurring legal, consulting and other fees and expenses incurred in connection with acquisitions, dispositions, debt-exchanges and other extraordinary transactions and events during the applicable period.
(2) Represents the non-cash charges related to restricted stock units and options.
(3) Represents fair value adjustments to our true-up guarantee obligation under the Revolver Exchange (as defined below), network outage related costs and related insurance recoveries, legal settlement costs for class action.
(4) Represents a loss/(gain) recognized on the disposal of property, plant, and equipment and other assets.
(5) Represents a loss/(gain) recognized on the sale of high-speed scanner business in the second quarter of 2023.

Source: Exela Technologies, Inc. 


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Source: Exela Technologies, Inc.