Press releases

Exela Technologies, Inc. Reports Fourth Quarter and Full Year 2018 Results; Digital Now℠ Powering Growth

Mar 18, 2019

 

Achieves revised full year guidance for Revenue and Adjusted EBITDA; Net Loss of $162.5 million; Expect 2019 revenue to be between $1.66 billion to $1.70 billion, and reduction of net leverage ratio by 5% - 7%

Fourth Quarter 2018 Highlights:

  • Revenue of $399.6 million, representing 3.4% growth over Q4 2017  
  • Operating loss of ($39.2) million, representing an improvement of $12.0 million over Q4 2017
  • Net loss of $84.4 million
  • EBITDA(1) of ($6.6) million, representing an improvement of $14.5 million over Q4 2017
  • Adjusted EBITDA(2) of $75.3 million, representing 20.0% growth over Q4 2017
  • Achieved $15.7 million of savings during the fourth quarter of 2018

 

Full-Year 2018 Highlights:

  • Revenue of $1.586 billion, representing 8.9% growth over 2017, on a pro forma basis
  • Operating loss of ($6.2) million, representing an improvement of $95.8 million over 2017, on a pro forma basis
  • Adjusted EBITDA of $283.8 million, representing 15.7% growth over 2017, on a pro forma basis
  • Achieved savings during 2018 totaling $64 million
  • Share buyback program remains in effect and 2,499,885 of common stock repurchased during 2018

 

IRVING, Texas , March 18, 2019 (GLOBE NEWSWIRE) -- 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 fourth quarter and year end December 31 , 2018. 

Exela reported strong financial growth during 2018, with revenue of $1.59 billion, an increase of 8.9%, and Adjusted EBITDA of $283.8 million, an increase of 15.7% on a year-over-year basis. Adjusted EBITDA margins for 2018 were 17.9%, an increase of 110bps from 16.8% in 2017. Exela also invested by expanding business development teams in Americas and in Europe to further accelerate growth and integration, to capitalize on its leading position in the marketplace and strengthen the Company's differentiated offerings. Exela now operates out of 23 countries and the Company continues to invest in people and operations to be closely aligned with its customers.

"We had a solid 2018 and achieved our revised guidance for both revenue and Adjusted EBITDA. Our continued investment in developing industry specific and departmental solutions, as well as increased customer awareness, are showing good results.  Digital NowSM made the difference!  In 2018, we achieved full-year revenue growth of approximately $130 million, and a 9% increase in revenue per FTE to $72,000. These investments, and increased customer awareness have helped achieve a growth rate of 14% in our Top 200 customers. With low customer concentration and a high customer retention rate of 98%, our goal for 2019 and beyond is to replicate the success that we had in our Top 200 customers. We believe the large and growing addressable market we operate in, provides us with substantial runway for growth and expansion, with a focus on our existing customers.  We are also committed to sensibly pursuing growth while de-levering our balance sheet over time." said Ronald Cogburn, Chief Executive Officer of Exela.

Financial information for 2018 contained in this press release, unless otherwise stated, is presented on an as reported basis in accordance with GAAP. Financial Information for the full-year 2017 is presented pro forma for the business combination of Quinpario Acquisition Corp. 2 (now Exela), SourceHOV Holdings, Inc. ("SourceHOV") and Novitex Holdings, Inc. ("Novitex"), which closed on July 12, 2017 (the "Business Combination"). The primary pro forma adjustment is to include the results of Novitex for the period January 1, 2017 to June 30, 2017. For more information, please refer to the reconciliation of reported to pro forma financial results contained in the Schedules to this press release.

Full Year 2018 Financial Highlights:

  • Revenue: Revenue of $1.586 billion an increase of 8.9% from $1.456 billion in 2017, on a pro forma basis. Revenue for our Information and Transaction Processing Solutions ("ITPS") segment was $1.274 billion, an increase of 12.6% year-over-year, driven primarily by growth in top customers, Digital NowSM model due to faster ramp up of contracts, growth investments and acquisitions offset by a decline in business with lower automation and project driven business. Healthcare Solutions ("HS") revenue was $228.0 million, a decline of 2.4% year-over-year due to a decline in volumes from a single customer who lost a contract from one its customers, offset by a ramp up of new businesses, including the most recent healthcare acquisition which will position the segment for growth in 2019. Legal and Loss Prevention Services ("LLPS") revenue was $84.6 million. Results in LLPS are event driven and were negatively impacted by projects that generated lower revenue.
     
  • Net Loss: Net Loss for 2018, was $162.5 million and represents an improvement of $79.9 million when compared to a pro forma net loss of $242.4 million in 2017. 2018 net loss was driven by $95.8 million higher operating income that was offset by an impairment charge of $48.1 million.  Excluding the impairment charge, the Company would have reported a net loss of $114.4 million for 2018.
     
  • Adjusted EBITDA: Adjusted EBITDA for the full-year 2018 was $283.8 million, an increase of 15.7% from $245.2 million in 2017, on a pro forma basis. Adjusted EBITDA margin for 2018 was 17.9%, an increase of 110 basis points when compared to an Adjusted EBITDA margin of 16.8% in 2017, on a pro forma basis. The increase in 2018 Adjusted EBITDA and Adjusted EBITDA margin was primarily driven by revenue growth, the Company's cost savings initiatives, and partially offset by investments the Company made for growth.
     
  • Common Stock: As of December 31, 2018, there were 155,729,299 total shares of common stock outstanding which includes 5,586,344 shares reserved for outstanding preferred shares on an as-converted basis. 
     
  • Share buyback: During 2018, the Company repurchased 2,499,885 shares of common stock. Cumulative shares repurchased under the Company's share buyback program total 2,549,185 since program inception.
     
  • $100 million contract won in Q4 2018, went live January 1, 2019; customer increased tenure by 2 years increasing its TCV to ~$165 million.
     
  • Launching SmartOfficeSM for growth in the front office automation offerings.
     
  • ~9%(3) increase in revenue per FTE to $72,000, result of Exela technology driving automation. The increase in revenue per FTE is even higher, at 11% or $73,000, when contributions from acquisitions are excluded.
     
  • ~$130 million in total 2018 revenue growth with 51 net additional FTEs.
      
  • Americas split (Revenue / Headcount) 85% / 46% - Growth in revenue mainly driven by automation leading to a headcount decline yoy.
  • EU split (Revenue / Headcount) 13% / 13% - Growth in revenue mainly driven by acquisition, far outpacing the headcount addition by over 6x.
     
  • Rest of World split (Revenue / Headcount) 2% / 14% - Modest growth in headcount enabling global delivery and "right-shoring" model. 
     
  • Low customer concentration with top 100 customers, comprising 61% of revenue out of over 4,000 customers.
     
  • 55% growth in revenue in Europe during 2018. 
  • Customer retention rate 98%.
     
  • Increase to 10 customers with over $25 million in annual revenue, up from 6 customers in December 2017.
     
  • Increase to 259 customers with over $1 million in annual revenue, up from 197 in December 2017.
     
  • Growth in revenue of 14% from top 200 customers, 12% growth excluding acquisitions.
     
  • 2018 investment in business development and customer awareness showing visible results. 

Fourth Quarter Ended December 31, 2018 Financial Highlights:

  • Revenue: Revenue of $399.6 million, an increase of 3.4% from $386.3 million in the fourth quarter of 2017. Revenue for our ITPS segment was $324.3 million, an increase of 7.6% year-over-year, driven primarily by growth in top customers, Digital NowSM model due to faster ramp up of contracts, growth investments and acquisitions offset by a decline in business with lower automation and project driven business. HS revenue was $56.3 million, a decline of 6.3% year-over-year mainly due to a decline in volumes from a single customer who lost a contract from one its customers, offset by a ramp up of new businesses, including the most recent healthcare acquisition which will position the segment for growth in 2019. LLPS revenue was $19.1 million. Results in LLPS are event driven and were negatively impacted by projects that generated lower revenue.
     
  • Net Loss: Net Loss for the fourth quarter of 2018 was $84.4 million, compared to a net loss of $58.7 million in the fourth quarter of 2017. Fourth quarter 2018 net loss was driven by $12.0 million higher operating income that was offset by an impairment charge of $48.1 million. Excluding the impairment charge, the Company would have reported a net loss of $36.3 million for the fourth quarter of 2018.
     
  • AdjustedEBITDA: Adjusted EBITDA for the fourth quarter of 2018 was $75.3 million an increase of 20.0% when compared to Adjusted EBITDA of $62.7 million in the fourth quarter of 2017. Adjusted EBITDA margin for the fourth quarter of 2018 was 18.8%, an increase of 260 basis points when compared to an Adjusted EBITDA margin of 16.2% in the fourth quarter of 2017. The increase in fourth quarter 2018 Adjusted EBITDA and Adjusted EBITDA margin was primarily driven by revenue growth, the Company's cost savings initiatives, and partially offset by investments the Company made for growth.
     
  • Capital Expenditures: Capital expenditures for the fourth quarter of 2018 was 3.1% of revenue compared to 2.9% on a year over year basis.

Balance Sheet and Liquidity:

  • At December 31, 2018, Exela's total liquidity was $116(4) million, measured as $44 million of cash, and an undrawn revolving credit facility of $100 million with $20.6 million reserved for letters of credit. Total net debt was $1.402 billion.

2019 guidance:

  • Revenue range $1.66 billion to $1.70 billion, growth of approximately 5% - 7% year over year.
  • Adjusted EBITDA range $305 million to $335 million, growth of approximately 7% - 18% year over year.
  • Capital expenditures range (as % of revenue) of 2% - 2.5%.
  • Capital Allocation to be prioritized towards debt pre-payment.
  • Reduction of net leverage ratio by 5% - 7%.

Note: Guidance is based on constant-currency.

Note on Outlook: The Company has not forecasted net income/(loss) on a forward-looking basis due to the high variability and difficulty in predicting certain items that affect GAAP net income/(loss). Adjusted EBITDA should not be used to predict net income/(loss) as the difference between the two measures is variable.

The above guidance is based on 2018 results.

Please refer to attached schedules for reconciliations. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect absolute figures.

(1) – EBITDA is a non-GAAP measure. A reconciliation of EBITDA is attached to this release.
(2) – Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.
(3) – Presented on a pro forma basis with acquisitions for the TTM period.
(4) – Total liquidity of $116 million excludes $7.7 million of restricted cash subject to legal restrictions.

Filing of Form 12b-25

We intend to file a Form 12b-25 Notification of Late Filing with the U.S. Securities and Exchange Commission, because we will be filling our Annual Report on Form 10-K for fiscal year ending 2018 after today's deadline.  The filing of the Form 12b-25 grants an automatic 15-day extension for the filing of our Annual Report.  We are postponing the filing because we experienced an unanticipated delay in compiling certain requested accounting information relating to one of our tuck in acquisitions we completed during 2018.  This business is not material to our results.  We anticipate filing our Form 10-K prior to the expiration of the 15 day extension period. Based on its review of the Company's disclosure controls and procedures, the Company's management expect to conclude that the Company's disclosure controls and procedures were not effective. Notwithstanding such weaknesses, the Company's management expects to conclude that the consolidated financial statements to be included in the Form 10-K will present fairly, in all material respects, the Company's financial position, results of operations and cash flows for the periods to be presented in the Form 10-K, in conformity with GAAP.

Earnings Conference Call and Audio Webcast

Exela will host a conference call to discuss its fourth quarter and full year 2018 financial results today at 5:00 p.m. ET.  To access this call, dial 833-255-2831 or +412-902-6724 (international).  A replay of this conference call will be available through March 25, 2019 at 877-344-7529 or +412-317-0088 (international).  The replay passcode is 10127041.  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.  Exela has also posted additional historical financial information regarding SourceHOV and on a combined basis to its investor relations website, (http://investors.exelatech.com).

About Exela
Exela Technologies, Inc. ("Exela") is a location-agnostic global business process automation ("BPA") leader combining industry-specific and multi-industry enterprise software and solutions with decades of experience. Our BPA suite of solutions are deployed in banking, healthcare, insurance and other industries to support mission critical environments. Exela is a leader in work flow automation, attended and un-attended cognitive automation, digital mail rooms, print communications, and payment processing with deployments across the globe. Exela partners with customers to improve user experience and quality through operational efficiency. Exela serves over 4,000 customers worldwide, through a secure, cloud-enabled global delivery model. We are 22,000 employees strong across the Americas, Europe and Asia. Our customer list includes 60% of the Fortune® 100, along with many of the world's largest retail chains, banks, law firms, healthcare insurance payers and providers and telecom companies.
Find out more at www.exelatech.com

Follow Exela on Twitter: https://twitter.com/exelatech
Follow Exela on LinkedIn: https://www.linkedin.com/company/11174620/

Preliminary Results
The financial results discussed herein are presented on a preliminary basis; final data will be included in Exela's Annual Report on Form 10-K for the period ended December 31, 2018.

About Non-GAAP Financial Measures: This press release includes 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 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 Business Combination and other such 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 Business Combination, asset base (such as depreciation and amortization) and other similar non-routine items outside the control of our management team.  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 to this release. Optimization and restructuring expenses and merger adjustments are primarily related to the implementation of strategic actions and initiatives related to the 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.

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, the estimated or anticipated future results and benefits of the business combination of Quinpario Acquisition Corp. 2 (now Exela), SourceHOV Holdings, Inc., ("SourceHOV") and  Novitex Holdings, Inc. ("Novitex"), which formed Exela Technologies, Inc. ("Exela"), and closed on July 12, 2017 (including the related transactions, the "Business Combination"), future opportunities for the combined company, 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 regarding Exela's business, and actual results may differ materially. These risks and uncertainties include, but are not limited to, changes in the business environment in which Exela operates and general financial, economic, regulatory and political conditions affecting the industries in which Exela operates; changes in taxes, governmental laws and regulations; competitive product and pricing activity or failure to realize the anticipated benefits of the Business Combination, including as a result of a delay or difficulty in integrating the businesses of SourceHOV and Novitex or the inability to realize the expected amount and timing of cost savings and operating synergies of the Business Combination; and those factors discussed under the heading "Risk Factors" in Exela's most recent Annual Report on Form-10-K filed with the 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.

Contact: Jim Mathias
E: ir@exelatech.com 
W: investors.exelatech.com 
T: +1 972-821-5808

Exela Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
For the years ended December 31, 2018 and 2017
(unaudited)
(in thousands of United States dollars except share and per share amounts)

    December 31, 
    2018     2017  
Assets              
Current assets            
Cash and cash equivalents   $   25,615     $   39,000  
Restricted cash       18,239         42,489  
Accounts receivable, net of allowance for doubtful accounts of $4,359 and $3,725 respectively       270,812         229,704  
Inventories, net       16,220         11,922  
Prepaid expenses and other current assets       25,015         24,596  
Total current assets       355,901         347,711  
Property, plant and equipment, net        132,986         132,908  
Goodwill       708,258         747,325  
Intangible assets, net        407,021         464,984  
Deferred income tax assets       16,225         9,019  
Other noncurrent assets       19,391         12,891  
Total assets   $   1,639,782     $   1,714,838  
             
Liabilities and Stockholders' Equity (Deficit)            
Liabilities            
Current liabilities            
Accounts payable   $   99,853     $   81,263  
Related party payables       7,735         14,445  
Income tax payable       1,996         3,612  
Accrued liabilities        66,008         49,383  
Accrued compensation and benefits       54,583         46,925  
Accrued interest       49,071         55,102  
Customer deposits       34,235         31,656  
Deferred revenue       16,504         12,709  
Obligation for claim payment        56,002         42,489  
Current portion of capital lease obligations       17,498         15,611  
Current portion of long-term debt       29,237         20,565  
Total current liabilities       432,722         373,760  
Long-term debt, net of current maturities        1,306,423         1,276,094  
Capital lease obligations, net of current maturities        26,738         25,958  
Pension liability       25,269         25,496  
Deferred income tax liabilities       11,212         5,362  
Long-term income tax liability       3,024         3,470  
Other long-term liabilities       15,400         14,704  
Total liabilities       1,820,788         1,724,844  
Commitment and Contingencies (Note 12)            
             
Stockholders' equity (deficit)            
Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 152,692,140 shares issued and 150,142,955 shares outstanding at December 31, 2018 and 150,578,451 shares issued and 150,529,151 outstanding at December 31, 2017       15         15  
Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 4,569,233 shares issued and outstanding at December 31, 2018 and 6,194,233 shares issued or outstanding at December 31, 2017       1         1  
Additional paid in capital       482,018         482,018  
Less: common stock held in treasury, at cost; 2,549,185 shares at December 31, 2018 and 49,300 shares at December 31, 2017       (10,342 )       (249 )
Equity-based compensation       41,731         34,085  
Accumulated deficit       (678,563 )       (514,628 )
Accumulated other comprehensive loss:            
Foreign currency translation adjustment       (6,565 )       (194 )
Unrealized pension actuarial losses, net of tax       (9,301 )       (11,054 )
Total accumulated other comprehensive loss       (15,866 )       (11,248 )
Total stockholders' deficit       (181,006 )       (10,006 )
Total liabilities and stockholders' deficit   $   1,639,782     $   1,714,838  
       
       

Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations for the Years ended December 31, 2018 and 2017 and 2016
(unaudited)
(in thousands of United States dollars except share and per share amounts)

    Year Ended December 31, 
    2018     2017     2016  
Revenue   $ 1,586,222     $ 1,152,324     $ 789,926  
Cost of revenue (exclusive of depreciation and amortization)     1,209,874       829,143       519,121  
Selling, general and administrative expenses     184,651       220,955       130,437  
Depreciation and amortization     145,485       98,890       79,639  
Impairment of goodwill and other intangible assets     48,127       69,437        
Related party expense     4,334       33,431       10,493  
Operating (loss) income       (6,249 )       (99,532 )       50,236  
Other expense (income), net:                  
Interest expense, net     153,095       128,489       109,414  
Loss on extinguishment of debt     1,067       35,512        
Sundry expense (income), net     (3,271 )     2,295       712  
Other income, net     (3,030 )     (1,297 )      
Net loss before income taxes     (154,110 )     (264,531 )     (59,890 )
Income tax (expense) benefit     (8,407 )     60,246       11,787  
Net loss   $ (162,517 )   $ (204,285 )   $ (48,103 )
Dividend equivalent on Series A Preferred Stock related to beneficial conversion feature     -       (16,375 )      
Cumulative dividends for Series A Preferred Stock     (3,655 )     (2,489 )      
Net loss attributable to common stockholders   $   (166,172 )   $   (223,149 )   $   (48,103 )
Loss per share:                  
Basic and diluted   $ (1.09 )   $ (2.08 )   $ (0.75 )
             
             

Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows 
For the Years ended December 31, 2018 and 2017 and 2016
(unaudited)
(in thousands of United States dollars unless otherwise stated)

    Years ended December 31, 
    2018     2017     2016  
Cash flows from operating activities                  
Net loss   $   (162,517 )   $   (204,285 )   $   (48,103 )
Adjustments to reconcile net loss                  
Depreciation and amortization       145,485         98,890         79,639  
Fees paid in stock       -          23,875         —   
HGM contract termination fee paid in stock       -          10,000         —   
Original issue discount and debt issuance cost amortization       10,913         12,280         13,684  
Impairment of goodwill and other intangible assets       48,127         69,437         —   
Provision for doubtful accounts       2,767         500         756  
Deferred income tax provision (benefit)       3,352         (66,723 )       (15,729 )
Share-based compensation expense       7,647         6,743         7,086  
Foreign currency remeasurement       (1,180 )       1,382         193  
Loss on sale of assets       2,095         399         2,245  
Fair value adjustment for interest rate swap       (2,540 )       (1,297 )       —   
Change in operating assets and liabilities, net of effect from acquisitions                  
Accounts receivable       (19,319 )       (4,832 )       20,801  
Prepaid expenses and other assets       (2,820 )       2,628         4,969  
Accounts payable and accrued liabilities       5,157         69,551         9,033  
Related party payables       (6,710 )       4,907         (2,427 )
Net cash provided by operating activities       30,457         23,455         72,147  
                         
Cash flows from investing activities                        
Purchase of property, plant and equipment       (20,072 )       (14,440 )       (7,926 )
Additions to internally developed software       (7,438 )       (7,843 )       (13,017 )
Additions to outsourcing contract costs       (7,552 )       (10,992 )       (14,636 )
Cash acquired in TransCentra acquisition       -          —          3,351  
Proceeds from sale of Assets       3,568         4,607         626  
Cash acquired in Quinpario reverse merger       -          91         —   
Cash paid in acquisition, net of cash received       (34,810 )       (423,797 )       —   
Net cash used in investing activities     (66,304      (452,374 )      (31,602 )
                         
Cash flows from financing activities                        
Change in bank overdraft       -          (210 )       (1,331 )
Loss on extinguishment of debt       1,067         35,512         —   
Proceeds from issuance of stock       -          204,417         —   
Cash received from Quinpario       -          27,031         —   
Repurchase of Common Stock       (7,221 )       (249 )       —   
Proceeds from financing obligation       11,557         3,116         5,429  
Contribution from Shareholders       -          20,548         —   
Proceeds from new credit facility       30,000         1,320,500         —   
Retirement of previous credit facilities       -          (1,055,736 )       —   
Cash paid for debt issuance costs        (1,094 )       (39,837 )       —   
Cash paid for equity issue costs       (7,500 )       (149 )       —   
Borrowings from revolver and swing-line loan       30,000         72,600         53,700  
Repayments from revolver and swing line loan       (30,000 )       (72,500 )       (53,200 )
Principal payments on long-term obligations       (28,719 )       (39,316 )       (47,853 )
Net cash provided by (used in) financing activities       (1,910 )       475,727       (43,255 )
Effect of exchange rates on cash       122         429         (2,059 )
Net increase (decrease) in cash and cash equivalents      (37,635 )       47,237         (4,769 )
Cash and cash equivalents                   
Beginning of period       81,489         34,252         39,021  
End of period   $   43,854     $   81,489     $   34,252  
                         
Supplemental cash flow data:                        
Income tax payments, net of refunds received   $   7,827     $   5,711     $   3,771  
Interest paid       146,076         69,622         96,166  
Noncash investing and financing activities:                        
Assets acquired through capital lease arrangements       14,920         6,973         11,925  
Leasehold improvements funded by lessor       1,565         146         5,186  
Issuance of common stock as consideration for Novitex       -          244,800         —   
Accrued capital expenditures       2,820         1,621         580  
Dividend equivalent on Series A Preferred Stock       -          16,375         —   
Liability assumed of Quinpario       -          4,672         —   
                         

Exela Technologies
Schedule 1: Fourth Quarter 2017 vs. Fourth Quarter 2018 Financial Performance
(unaudited)

$ in millions Q4'17 Q4'18   Change ($)
Information and Transaction Processing Solutions 301.5   324.3     22.8  
Healthcare Solutions 60.1   56.3     (3.8 )
Legal and Loss Prevention Services 24.7   19.1     (5.6 )
Total Revenue    386.3     399.6       13.4  
% change     3.4 %      
                 
Cost of revenue (exclusive of depreciation and amortization) 289.9   306.2     16.3  
Gross profit    96.4     93.5       (2.9 )
% change     -3.0 %      
as a % of revenue 25.0 % 23.4 %      
                 
SG&A 48.3   47.4     (0.9 )
Depreciation and amortization 28.1   36.1     7.9  
Impairment of goodwill and other intangible assets 69.4   48.1     (21.3 )
Related party expense 1.7   1.1     (0.6 )
Operating (loss) income    (51.2 )   (39.2 )     12.0  
as a % of revenue -13.3 % -9.8 %      
                 
Interest expense, net 36.7   38.2     1.5  
Loss on extinguishment of debt -   -     -  
Sundry expense (income) & Other income, net (2.0 ) 3.5     5.4  
Net loss before income taxes    (86.0 )   (80.9 )     5.1  
Income tax expense (benefit) (27.3 ) 3.5     30.8  
Net income (loss)    (58.7 )   (84.4 )     (25.7 )
as a % of revenue -15.2 % -21.1 %      
                 
Depreciation and amortization 28.1   36.1     7.9  
Interest expense, net 36.7   38.2     1.5  
Income tax expense (benefit) (27.3 ) 3.5     30.8  
EBITDA    (21.1 )   (6.6 )     14.5  
as a % of revenue -5.5 % -1.7 %      
                 
EBITDA Adjustments               
  1  Transaction and integration costs 2.4   2.0     (0.3 )
  2  Optimization and restructuring expenses 11.0   21.2     10.2  
  3  Gain / loss on derivative instruments (1.3 ) 2.9     4.2  
  4  Other Charges 71.8   55.8     (16.0 )
Adjusted EBITDA    62.7     75.3       12.6  
% change     20.0 %      
as a % of revenue 16.2 % 18.8 %      
                 

Exela Technologies
Schedule 2: Pro Forma 2017(1) vs. 2018 Financial Performance
(unaudited)

$ in millions   FY17 FY18   Change ($)
Information and Transaction Processing Solutions   1,131.0   1,273.6     142.6  
Healthcare Solutions   233.6   228.0     (5.6 )
Legal and Loss Prevention Services   91.6   84.6     (7.1 )
Total Revenue      1,456.3     1,586.2       129.9  
% change     8.9 %    
             
Cost of revenue (exclusive of depreciation and amortization)   1,079.9   1,209.9     130.0  
Gross profit      376.4     376.3       (0.0 )
% change     0.0 %    
as a % of revenue   25.8 % 23.7 %    
             
SG&A   255.8   184.7     (71.1 )
Depreciation and amortization   119.5   145.5     26.0  
Impairment of goodwill and other intangible assets   69.4   48.1     (21.3 )
Related party expense   33.7   4.3     (29.4 )
Operating (loss) income      (102.1 )   (6.2 )     95.8  
as a % of revenue   -7.0 % -0.4 %    
             
Interest expense, net   153.4   153.1     (0.3 )
Loss on extinguishment of debt   53.0   1.1     (51.9 )
Sundry expense (income) & Other income, net   1.1   (6.3 )   (7.4 )
Net loss before income taxes      (309.6 )   (154.1 )     155.5  
Income tax expense (benefit)   (67.2 ) 8.4     75.6  
Net income (loss)      (242.4 )   (162.5 )     79.9  
as a % of revenue   -16.6 % -10.2 %    
             
Depreciation and amortization   119.5   145.5     26.0  
Interest expense, net   153.4   153.1     (0.3 )
Income tax expense (benefit)   (67.2 ) 8.4     75.6  
EBITDA      (36.7 )   144.5       181.1  
as a % of revenue   -2.5 % 9.1 %    
             
EBITDA Adjustments           
  1  Transaction and integration costs   99.0   4.1     (94.8 )
  2  Optimization and restructuring expenses   47.9   68.2     20.3  
  3  Gain / loss on derivative instruments   (1.3 ) (1.9 )   (0.6 )
  4  Other Charges   136.3   69.0     (67.3 )
Adjusted EBITDA      245.2     283.8       38.6  
% change     15.7 %    
as a % of revenue   16.8 % 17.9 %    
             

(1) Net loss for the period is presented on the basis of the previous debt structure of the respective standalone companies that became Exela as a result of the Business Combination. As of July 12th, 2017 those debt structures were replaced with new debt consisting of $350 million Term Loan and $1.0 billion Senior Secured Notes.
             

Exela Technologies
Schedule 3: 2017 Adjusted EBITDA Reconciliation

    FY2017(1)
$ in millions   As Reported
 
  Novitex
 
  Pro Forma
 
Revenue   $ 1,152.3     $ 304.0     $ 1,456.3  
Cost of revenue (exclusive of depreciation and amortization)     829.1       250.8       1,079.9  
Selling, general and administrative expenses (Including related party)     254.4       35.1       289.5  
Depreciation and amortization     98.9       20.6       119.5  
Impairment of goodwill and other intangible assets     69.4       0.0       69.4  
Operating income (loss)     (99.5 )     (2.5 )     (102.1 )
                         
Interest expense, net     128.5       24.9       153.4  
Loss / (Gain) on extinguishment of debt     35.5       17.5       53.0  
Sundry expense & other income, net     1.0       0.0       1.1  
Net loss before income taxes     (264.5 )     (45.0 )     (309.6 )
Income tax (benefit) expense     (60.2 )     (6.9 )     (67.2 )
Net loss   $ (204.3 )   $ (38.0 )   $ (242.4 )
                         
Add:                        
Taxes     (60.2 )     (6.9 )     (67.2 )
Interest expense     128.5       24.9       153.4  
Depreciation and amortization       98.9         20.6         119.5  
EBITDA   $ (37.2 )   $ 0.6     $ (36.7 )
                         
Transaction related costs     88.9       10.0       99.0  
Optimization and restructuring expenses     42.5       5.4       47.9  
(Gain) / loss on derivative instruments     (1.3 )     0.0       (1.3 )
Other Charges     115.8       20.5       136.3  
Adjusted EBITDA   $ 208.8     $ 36.5     $ 245.2  
                         

(1) Net loss for the period is presented on the basis of the previous debt structure of the respective standalone companies that became Exela as a result of the Business Combination. As of July 12th, 2017 those debt structures were replaced with new debt consisting of $350 million Term Loan and $1.0 billion Senior Secured Notes.

Exela-826x374.png

 

Source: Exela Technologies, Inc.