TechWeb

EXL Reports 2009 Third Quarter Results

Nov 06, 2009 (06:11 AM EST)
URL: http://www.techweb.com/show-press-release/X785455/exl-reports-2009-third-quarter-results.html

NEW YORK, Nov. 6 /PRNewswire-FirstCall/ -- ExlService Holdings, Inc. , a leading provider of outsourcing and transformation services, today announced its financial results for the quarter ended September 30, 2009.

Rohit Kapoor, President and CEO, commented: "We experienced strong revenue growth this quarter and continued momentum in the market place. Our results reflect the investments and efforts that we have directed to execution and client centricity. In our outsourcing business, our team ensured a smooth ramp-up and efficient employee on-boarding for our recently acquired clients. In transformation services, we expanded our existing client relationships while increasing the annuity-based percentage of the business.

We are also pleased to announce a new eight-year agreement to service the back-office operations of American Express Business Travel and the associated acquisition of American Express' Global Travel Service Center operations in Gurgaon, India. We estimate achieving more than $160 million in revenues over the life of the contract. Through this transaction, we will deepen our relationship with one of our key clients as well as expand our capability set in analytics, exception processing, and transaction processing. This acquisition also adds an experienced management team and an additional delivery center to EXL. We expect the transaction to close first quarter next year."

Vishal Chhibbar, CFO, commented: "The investments we made in expanding our delivery infrastructure in the first half of this year are paying off. Sequential revenue growth was 13.7% quarter on quarter. We delivered outsourcing revenues of $37.7 million and transformation revenues of $10.5 million. We generated $9.7 million in operating cash flows and ended the quarter with a cash balance of $117.5 million versus $114.3 million last quarter. Adjusted operating margin for the quarter increased to 14.8% due to higher utilization of our physical infrastructure and people as well as strong execution across business lines. We are pleased to increase our calendar year 2009 guidance for revenue to $178.0 million - $180.0 million from $170.0 million - $175.0 million and our adjusted operating margin to 13.0% - 13.5% from 10.0% - 12.0%."

The Company is increasing its guidance for calendar year 2009:

EXL will host a conference call on Friday, November 6, at 8:00 a.m. (ET) to discuss the company's quarterly results and operating performance. The conference call will be available live via the internet by accessing the investor relations section of EXL's website at HASH(0x1317460) , where the accompanying presentation and an investor factsheet can also be accessed. Please go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software.

To listen to the conference call via phone, please dial 1-800-884-5695 or 1-617-786-2960 and enter "73278987." For those who cannot access the live broadcast, a replay will be available by dialing 1-888-286-8010 or 1-617-801-6888 and entering "85132426" from two hours after the end of the call until 11:59 p.m. (ET) on November 13, 2009. The replay will also be available on the EXL website ( HASH(0x1318a70) ).

EXL will host its First Annual Investor Day on Friday, November 6, 2009 at 9:30 a.m. (ET) in New York City at the NASDAQ MarketSite in Times Square. To listen to the investor day events via phone, please dial 1-888-452-4007 or 1-719-325-2481 and reference "EXLService Investor Day 2009." The event will also be made available via live audio webcast on the investor relations section of EXL's website at HASH(0x1318b20) HASH(0x131a560) . Slides will be made available. For those who cannot access the live broadcast, an archived webcast of the presentations will be available on the EXL website ( ) after the end of the event.

ExlService Holdings, Inc. HASH(0x131bb90) is a leading provider of outsourcing and transformation services. EXL's outsourcing services include a full spectrum of business process outsourcing services from offshore delivery centers requiring ongoing process management skills. Transformation services enable continuous improvement of client processes by bringing together EXL's capabilities in decision analytics, risk and financial management and operations and process excellence services. Headquartered in New York, EXL primarily serves the needs of Global 1000 companies in the insurance, utilities, financial services and transportation and logistics sectors. Find additional information about EXL at .

EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except share and per share amounts) Three months ended Nine months ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenues $48,186 $46,573 $131,557 $138,019 Cost of revenues (exclusive of depreciation and amortization) 28,803 28,046 78,986 86,902 ------ ------ ------ ------ Gross profit 19,383 18,527 52,571 51,117 ------ ------ ------ ------ Operating expenses: General and administrative expenses 7,770 7,349 22,137 24,193 Selling and marketing expenses 3,516 3,081 10,040 8,366 Depreciation and amortization 2,918 2,832 8,137 8,302 ----- ----- ----- ----- Total operating expenses 14,204 13,262 40,314 40,861 ------ ------ ------ ------ Income from continuing operations 5,179 5,265 12,257 10,256 Other income/(expense): Foreign exchange gain/(loss) (1,995) (6,637) (5,014) (5,847) Interest and other income, net 269 1,157 856 2,294 --- ----- --- ----- Income/(loss) from continuing operations before income taxes 3,453 (215) 8,099 6,703 Income tax provision/ (benefit) (541) (589) (169) (984) ---- ---- ---- ---- Income from continuing operations 3,994 374 8,268 7,687 Income/(loss) from discontinued operations, net of taxes - (1,449) (139) 3,302 - ------ ---- ----- Net income/(loss) to common stockholders $3,994 $(1,075) $8,129 $10,989 ====== ======= ====== ======= Earnings/(loss) per share(a): Basic: Continuing operations $0.14 $0.01 $0.29 $0.27 Discontinued operations - (0.05) - 0.11 - ----- - ---- $0.14 $(0.04) $0.28 $0.38 ===== ====== ===== ===== Diluted: Continuing operations $0.14 $0.01 $0.28 $0.26 Discontinued operations - (0.05) - 0.11 - ----- - ---- $0.14 $(0.04) $0.28 $0.38 ===== ====== ===== ===== Weighted-average number of shares used in computing earnings per share: Basic 28,930,344 28,846,137 28,893,515 28,801,102 Diluted 29,368,390 29,127,304 29,202,856 29,257,254 (a) Per share amounts may not foot due to rounding. EXLSERVICE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share amounts) September 30, December 31, 2009 2008 ---- ---- Assets Current assets: Cash and cash equivalents $117,510 $112,174 Short-term investments 816 153 Restricted cash 1,311 203 Accounts receivable, net of allowance for doubtful accounts of $259 at September 30, 2009 and $128 at December 31, 2008 31,578 33,714 Deferred tax assets 4,490 3,401 Advance income-tax, net 101 2,033 Prepaid expenses and other current assets 3,546 6,199 ----- ----- Total current assets 159,352 157,877 ------- ------- Fixed assets, net of accumulated depreciation of $35,787 at September 30, 2009 and $27,727 at December 31, 2008 22,702 24,518 Goodwill 19,595 17,557 Intangible assets 710 - Restricted cash 3,744 281 Deferred tax assets, net 7,735 3,047 Other assets 10,500 8,689 ------ ----- Total assets $224,338 $211,969 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $2,254 $3,371 Deferred revenue 3,379 2,961 Accrued employee cost 12,176 14,725 Accrued expenses and other current liabilities 12,157 18,011 ------ ------ Total current liabilities 29,966 39,068 ------ ------ Non-current liabilities 3,433 1,569 ----- ----- Total liabilities 33,399 40,637 ------ ------ Commitments and contingencies Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued - - Stockholders' equity: Common stock, $0.001 par value; 100,000,000 shares authorized, 29,179,013 shares issued and outstanding as of September 30, 2009 and 29,054,145 shares issued and outstanding as of December 31, 2008 29 29 Additional paid-in capital 122,308 116,676 Retained earnings 78,150 70,021 Accumulated other comprehensive loss (8,572) (14,491) ------ ------- 191,915 172,235 ------- ------- Less: 247,030 shares as of September 30, 2009 and 237,080 shares as of December 31, 2008, held in treasury, at cost (976) (903) ---- ---- Total stockholders' equity 190,939 171,332 ------- ------- Total liabilities and stockholders' equity $224,338 $211,969 ======== ========

In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), EXL has included in this release adjusted financial measures that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that these adjusted financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results because the adjustments eliminate the impact of the following two items which do not directly link to the Company's ongoing performance: (i) stock compensation and (ii) expenses associated with the amortization of acquisition-related intangibles. The Company also believes that it is unreasonably difficult to provide its financial outlook in accordance with GAAP for a number of reasons including, without limitation, the Company's inability to predict its future stock-based compensation expense under SFAS 123R and the amortization of intangibles associated with further acquisitions. The adjusted financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from those financial statements should be carefully evaluated.

The following table shows the reconciliation of these adjusted financial measures from GAAP measures for the three month periods ended September 30, 2009, September 30, 2008 and June 30, 2009:

(Amounts in thousands)

ExlService Holdings, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Three Months Ended September 30, September 30, ---------------------------- ---------------------------- 2009 2009 2008 2008 US GAAP Adjustments Non-GAAP US GAAP Adjustments Non-GAAP ------- ----------- -------- ------- ----------- -------- Revenues $48,186 $- $48,186 $46,573 $- $46,573 Cost of revenues (exclusive of depreciation and amortization) 28,803 (341)(a) 28,462 28,046 (396)(a) 27,650 ------ --- ------ ------ --- ------ Gross profit 19,383 341 19,724 18,527 396 18,923 ====== === ====== ====== === ====== Gross Margin % 40.2% 40.9% 39.8% 40.6% Selling, general and administrative expenses 11,286 (1,535)(a) 9,751 10,430 (1,155)(a) 9,275 Depreciation and amortization expense 2,918 (84)(b) 2,834 2,832 (51)(b) 2,781 ------ ------ ------ ------ ------ ------ Income from operations $5,179 $1,960 $7,139 $5,265 $1,602 $6,866 ====== ====== ====== ====== ====== ====== Income from Operations Margin % 10.7% 14.8% 11.3% 14.7% Three Months Ended June 30, ---------------------------- 2009 2009 US GAAP Adjustments Non-GAAP ------- ----------- -------- Revenues $42,385 $- $42,385 Cost of revenues (exclusive of depreciation and amortization) 25,827 (454)(a) 25,373 ------ --- ------ Gross profit 16,558 454 17,012 ====== === ====== Gross Margin % 39.1% 40.1% Selling, general and administrative expenses 10,974 (1,520)(a) 9,454 Depreciation and amortization expense 2,789 - (b) 2,789 ------ ------ ------ Income from operations $2,795 $1,974 $4,769 ====== ====== ====== Income from Operations Margin % 6.6% 11.3% (a) To exclude stock-based compensation expense under SFAS 123R. (b) To exclude amortization of acquisition-related intangibles.

CONTACT: Jean Liang, Head of Investor Relations of ExlService Holdings, ir@exlservice.comInc., +1-212-277-7115,

Web site: http://www.exlservice.com/