UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification Number) |
|
|
||
| (Address of principal executive offices) | (Zip Code) |
Company’s telephone number, including
area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition
Information in Item 8.01 is incorporated by reference in this Item 2.02.
Item 8.01 Other Events
On August 10, 2021, Exela Technologies, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1.
The Company is making reference to non-GAAP financial information in the press release. A reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
Cautionary Statement Concerning Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of federal securities laws. Words such as “expect” and “intend” and similar expressions identify forward-looking statements, which include but are not limited to statements related to our liquidity and potential financing sources. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including those in our risk factors that we identify in our most recent annual report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (“SEC”) on June 15, 2020, and any updates thereto in the Company's quarterly reports on Form 10-Q and current reports on Form 8-K, as well as the “Risk Factors” section of our prospectus supplement filed with the SEC on June 30, 2021. We caution you not to place undue reliance on our forward-looking statements, which speak only as of their date, and we undertake no obligation to update this information.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Exhibit Description | |
| 99.1 | Press Release dated August 10, 2021 | |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
| 2 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 10, 2021
| EXELA TECHNOLOGIES, INC. | |||
| By: | /s/ Shrikant Sortur | ||
| Name: | Shrikant Sortur | ||
| Title: | Chief Financial Officer | ||
3
Exhibit 99.1
Exela Technologies, Inc. Reports Preliminary Second Quarter 2021 Results
Revenue of $293.0 million, net loss of $19.4 million, and Adjusted EBITDA of $50.9 million
Reiterates 2021 financial guidance
$158 million liquidity ahead of plan
Achieves over $140 million reduction in net debt year-to-date
SMB business showing robust growth globally
Conference call scheduled for August 10, 2021 at 11:00 AM ET
Second Quarter 2021 Highlights:
| · | Revenue of $293.0 million, a decline of 2.3% from Q1 2021 |
| · | Healthcare Solutions revenue increased ~10% and Legal and Loss Prevention Services revenue grew ~14% from Q1 2021 |
| · | Gross profit (1) margin of 28.6%, an increase of ~720 basis points from Q2 2020 and ~620 basis points from Q1 2021 |
| · | Operating income of $25.4 million, compared with operating loss of $5.1 million in Q2 2020 |
| · | Net loss of $19.4 million, compared with net loss of $48.7 million in Q2 2020 |
| · | Gross Profit of $83.9 million, an increase of 27% from $65.9 million in Q2 2020 |
| · | EBITDA (2) of $44.9 million, an increase of 133% from $19.3 million in Q2 2020 |
| · | Adjusted EBITDA (3) of $50.9 million, an increase of 18.0% from $43.1 million in Q2 2020 |
| · | Small-and-Medium-Sized Business “SMB” business continues robust growth globally with DMR and DrySign solutions |
| · | Positive operating leverage driven by from Work-from-Anywhere adoption and automation |
| · | Strong financial flexibility with $158 million liquidity position enabled by the $224 million(4) in gross proceeds from recent equity offerings yielding over $140 million reduction in net debt(5) year-to-date through August 6, 2021 |
Irving, TX– August 10, 2021 – Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA), a global business process automation (“BPA”) leader, announced today its financial results for the second quarter ended June 30, 2021.
“We generated strong margin expansion in the second quarter, which reflects our ongoing commitment to focus on our core businesses and drive operational improvement. We are pleased with the rapid growth of our digital solutions for the SMB market where we see significant opportunity for continued expansion. Finally, we are also pleased to report a $158 million liquidity exceeding our liquidity targets announced in November 2019 while reducing our outstanding debt. Based on our second quarter results and the increased stability in our business, we reiterate our prior 2021 guidance” said Ronald Cogburn, Chief Executive Officer of Exela.
1
Second Quarter 2021 Financial Highlights
| · | Revenue: Revenue for Q2 2021 was $293.0 million, a decline of 4.8% compared to $307.7 million in Q2 2020. Revenue for the Information and Transaction Processing Solutions segment was $217.3 million, a decline of 10.6% year-over-year, primarily due to lower volumes as a result of COVID-19 and transition revenue (6) roll off. Exela believes it is well positioned to see volumes return in the ITPS segment once COVID-19 impacts subside. Healthcare Solutions revenue was $56.2 million, an increase of 14.3% year-over-year, primarily due to increased volumes driven by new statements of work, new customers and backlog from existing customers. Legal and Loss Prevention Services revenue was $19.5 million, an increase of 25.9% year-over-year. |
| · | Operating income / (loss): Operating income for Q2 2021 was $25.4 million, compared with operating loss of $5.1 million in Q2 2020. The year-over-year improvement in operating income was primarily attributable to higher gross profit, lower SG&A costs, and lower depreciation and amortization expenses. |
| · | Net Loss: Net loss for Q2 2021 was $19.4 million, compared with a net loss of $48.7 million in Q2 2020, primarily due to increased operating income and lower interest expense. |
| · | Adjusted EBITDA: Adjusted EBITDA for Q2 2021 was $50.9 million, an increase of 18.0% compared to $43.1 million in Q2 2020. Adjusted EBITDA margin for Q2 2021 was 17.4%, an increase of 336 basis points from 14.0% in Q2 2020 and 189 basis points from 15.5% in Q1 2021. |
| · | Common Stock: As of June 30, 2021, there were 70,409,282 total shares of common stock outstanding and an additional 1,245,758 shares of common stock reserved for issuance for our outstanding preferred shares on an as-converted basis. |
Second Quarter 2021 Business Highlights
Contract and product updates:
| · | Completed the commercial launch of DrySign in India on June 1, 2021, allowing businesses to sign documents from any internet connected device |
| · | Launched Digital Mail Room (“DMR”) on June 30, 2021 in the United Kingdom and launched in France and Germany in August 2020, facilitating continued global expansion |
| · | Q2 2021 DrySign user growth of 144% and DMR customer growth of 99% from Q1 2021 |
| · | Expanded PCH Global Deployment for one of the world’s largest specialty care services insurance companies, paving the way to connecting claims and correspondence from over 27,000 unique hospital systems and providers across the country |
Operating leverage improvement continues:
| · | Completed four real estate facility closures in the second quarter, underscoring continued adoption of Exela’s Work-From-Anywhere model |
| · | Automation led efficiencies reduced employee count to approximately 18,000 as of June 30, 2021 from 18,400 as of March 31, 2021 |
Capital Expenditures: Capital expenditures for the second quarter of 2021 were 0.7% of revenue compared to 1.1% of revenue in the second quarter of 2020.
2
Balance Sheet and Liquidity(7): As of June 30, 2021, Exela’s liquidity was $67.9 million. Exela’s net debt at June 30, 2021 was $1,477.2 billion (as determined in accordance with the Company's credit agreement). As of August 6, 2021 the Company’s liquidity was approximately $158 million including $136 million of cash and cash equivalents.
Expanding financial flexibility: Raised a total of $223.9 million in gross proceeds year to date through August 6, 2021 under three equity offerings. (4)
| · | As of August 6, 2021, and after giving effect to the shares sold in the equity offerings, there were 144,041,323 shares of common stock outstanding. |
| · | In accordance with Exela’s plan to use proceeds from its equity offerings to strategically reduce its debt and associated interest expense obligations as well as explore ways to invest in its growth, Exela repurchased an aggregate of $59.1 million of its term loans and senior secured notes for an aggregate purchase price of $35.1 million since June 30, 2021. |
Exela plans to continue working on expanding its financial flexibility with the objective to improve consolidated cash flows from all activities.
2021 Guidance
| · | Revenue range $1.25 billion to $1.39 billion |
| · | Gross profit margin of 23% to 25% |
| · | Adjusted EBITDA margin 16% to 17% |
| · | Capital expenditures in the range of 1% of revenue |
Note: Guidance is based on constant-currency.
Preliminary Results; Notes
The financial results discussed herein are presented on a preliminary basis; final data will be included in Exela’s Quarterly Report on Form 10-Q for the period ended June 30, 2021.
3
Below are the notes referenced above:
(1) – Gross Profit is defined as Revenue less cost of revenue excluding depreciation and amortization.
(2) – EBITDA is a non-GAAP measure. A reconciliation of EBITDA is attached to this release.
(3) – Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release. A reconciliation of Adjusted EBITDA (2021 Guidance) is not available on forward-looking basis without unreasonable efforts due to the impact and timing on future operating results arising from items excludes from the measures.
(4) – The $224 million gross equity proceeds include $197 million of equity proceeds raised through the at-the-market sale of equity securities in the YTD period. The equity proceeds also include $26.8 million from the private placement offering completed earlier this year in March 2021. Please refer to the equity capital raise related press release dated March 15, 2021 and Form 8-K dated March 19, 2021 for more details.
(5) – Net debt is calculated as the difference between the total debt outstanding (including $1.0 billion of senior secured notes, $355.1 million of term loans under the credit agreement dated July 12, 2017, $83.5 million of revolving credit facility, $21.8 million of capital leases and $32.0 million of other debt) and the sum of $59.1 million debt repurchased (but not retired following the quarter end) and $136.0 million of consolidated cash balances as of August 6, 2021.
(6) – Transition revenue includes the exit of contracts and statements of work from certain customers that the Company believes are unpredictable, non-recurring, and were not a strategic fit to its long-term success or unlikely to achieve long-term target margins.
(7) – Liquidity as defined per the third amendment of the credit agreement effective May 15, 2020.
Earnings Conference Call and Audio Webcast
Exela will host a conference call to discuss its second quarter 2021 financial results at 11:00 a.m. ET on August 10, 2021. To access this call, dial 833-255-2831 or +1-412-902-6724 (international). A replay of this conference call will be available through August 17, 2021 at 877-344-7529 or +1-412-317-0088 (international). The replay passcode is 10159119.
Exela invites all investors to ask questions that they would like addressed on the conference call. We ask individual 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. With foundational technologies spanning information management, workflow automation, and integrated communications, Exela’s software and services include multi-industry department solution suites addressing finance and accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and public sectors. Through cloud-enabled platforms, built on a configurable stack of automation modules, and over 18,400 employees operating in 23 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner.
4
Find out more at www.exelatech.com
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.
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.
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.
5
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 those discussed under the heading “Risk Factors” in the Annual Report. 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.
Rounding : 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.
Investor and/or Media Contacts:
Vincent Kondaveeti
E: vincent.kondaveeti@exelatech.com
T: 929-620-1849
Mary Beth Benjamin
E: IR@exelatech.com
T: 646-277-1216
Source: Exela Technologies, Inc.
6
Exela Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 2021 and December 31, 2020
(in thousands of United States dollars except share and per share amounts)
(UNAUDITED)
| June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 45,866 | $ | 68,221 | ||||
| Restricted cash | 1,998 | 2,088 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $5,885 and $5,647, respectively | 201,929 | 206,868 | ||||||
| Related party receivables and prepaid expenses | 712 | 711 | ||||||
| Inventories, net | 15,130 | 14,314 | ||||||
| Prepaid expenses and other current assets | 25,822 | 31,091 | ||||||
| Total current assets | 291,457 | 323,293 | ||||||
| Property, plant and equipment, net of accumulated depreciation of $185,684 and $193,760, respectively | 76,520 | 87,851 | ||||||
| Operating lease right-of-use assets, net | 63,529 | 68,861 | ||||||
| Goodwill | 358,561 | 359,781 | ||||||
| Intangible assets, net | 268,525 | 292,664 | ||||||
| Deferred income tax assets | 6,643 | 6,606 | ||||||
| Other noncurrent assets | 25,420 | 18,723 | ||||||
| Total assets | $ | 1,090,655 | $ | 1,157,779 | ||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 65,801 | $ | 76,027 | ||||
| Related party payables | 489 | 97 | ||||||
| Income tax payable | 1,654 | 2,466 | ||||||
| Accrued liabilities | 111,713 | 126,399 | ||||||
| Accrued compensation and benefits | 63,417 | 63,467 | ||||||
| Accrued interest | 48,952 | 48,769 | ||||||
| Customer deposits | 15,269 | 21,277 | ||||||
| Deferred revenue | 20,935 | 16,377 | ||||||
| Obligation for claim payment | 25,562 | 29,328 | ||||||
| Current portion of finance lease liabilities | 9,960 | 12,231 | ||||||
| Current portion of operating lease liabilities | 17,096 | 18,349 | ||||||
| Current portion of long-term debts | 34,778 | 39,952 | ||||||
| Total current liabilities | 415,626 | 454,739 | ||||||
| Long-term debt, net of current maturities | 1,497,063 | 1,498,004 | ||||||
| Finance lease liabilities, net of current portion | 11,884 | 13,287 | ||||||
| Pension liabilities, net | 34,885 | 35,515 | ||||||
| Deferred income tax liabilities | 10,331 | 9,569 | ||||||
| Long-term income tax liabilities | 2,283 | 2,759 | ||||||
| Operating lease liabilities, net of current portion | 49,391 | 56,814 | ||||||
| Other long-term liabilities | 12,458 | 13,624 | ||||||
| Total liabilities | 2,033,921 | 2,084,311 | ||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Stockholders' equity (deficit) | ||||||||
| Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 72,860,988 shares issued and 70,409,282 shares outstanding at June 30, 2021 and 51,693,931 shares issued and 49,242,225 shares outstanding at December 31, 2020 | 17 | 15 | ||||||
| Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 2,778,111 shares issued and outstanding at June 30, 2021 and 3,290,050 shares issued and outstanding at December 31, 2020 | 1 | 1 | ||||||
| Additional paid in capital | 489,176 | 446,739 | ||||||
| Less: Common Stock held in treasury, at cost; 2,451,706 shares at June 30, 2021 and December 31, 2020 | (10,949 | ) | (10,949 | ) | ||||
| Equity-based compensation | 53,163 | 52,183 | ||||||
| Accumulated deficit | (1,448,605 | ) | (1,390,038 | ) | ||||
| Accumulated other comprehensive loss: | ||||||||
| Foreign currency translation adjustment | (8,763 | ) | (7,419 | ) | ||||
| Unrealized pension actuarial losses, net of tax | (17,306 | ) | (17,064 | ) | ||||
| Total accumulated other comprehensive loss | (26,069 | ) | (24,483 | ) | ||||
| Total stockholders' deficit | (943,266 | ) | (926,532 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 1,090,655 | $ | 1,157,779 | ||||
7
Exela Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2021 and 2020
(in thousands of United States dollars except share and per share amounts)
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 293,009 | $ | 307,722 | $ | 593,064 | $ | 673,173 | ||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 209,080 | 241,788 | 441,666 | 534,326 | ||||||||||||
| Selling, general and administrative expenses (exclusive of depreciation and amortization) | 36,390 | 47,014 | 78,275 | 97,387 | ||||||||||||
| Depreciation and amortization | 19,420 | 22,847 | 39,020 | 46,032 | ||||||||||||
| Related party expense | 2,748 | 1,146 | 4,455 | 2,698 | ||||||||||||
| Operating profit (loss) | 25,371 | (5,073 | ) | 29,648 | (7,270 | ) | ||||||||||
| Other expense (income), net: | ||||||||||||||||
| Interest expense, net | 42,867 | 44,440 | 85,999 | 86,028 | ||||||||||||
| Sundry expense (income), net | (787 | ) | (899 | ) | (573 | ) | 183 | |||||||||
| Other expense (income), net | 651 | (584 | ) | 803 | (35,241 | ) | ||||||||||
| Net loss before income taxes | (17,360 | ) | (48,030 | ) | (56,581 | ) | (58,240 | ) | ||||||||
| Income tax benefit (expense) | (2,007 | ) | (661 | ) | (1,989 | ) | (3,120 | ) | ||||||||
| Net loss | $ | (19,367 | ) | $ | (48,691 | ) | $ | (58,570 | ) | $ | (61,360 | ) | ||||
| Cumulative dividends for Series A Preferred Stock | (798 | ) | (858 | ) | 98 | 582 | ||||||||||
| Net loss attributable to common stockholders | $ | (20,165 | ) | $ | (49,549 | ) | $ | (58,472 | ) | $ | (60,778 | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and diluted | $ | (0.33 | ) | $ | (1.01 | ) | $ | (1.04 | ) | $ | (1.24 | ) | ||||
8
Exela Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2021 and 2020
(in thousands of United States dollars unless otherwise stated)
(UNAUDITED)
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (58,570 | ) | $ | (61,360 | ) | ||
| Adjustments to reconcile net loss | ||||||||
| Depreciation and amortization | 39,020 | 46,032 | ||||||
| Original issue discount and debt issuance cost amortization | 7,829 | 6,857 | ||||||
| Provision for doubtful accounts | 1,781 | (110 | ) | |||||
| Deferred income tax provision | (41 | ) | (338 | ) | ||||
| Share-based compensation expense | 980 | 1,782 | ||||||
| Unrealized foreign currency losses | (485 | ) | (980 | ) | ||||
| Gain on sale of assets | (238 | ) | (34,791 | ) | ||||
| Fair value adjustment for interest rate swap | (125 | ) | 440 | |||||
| Change in operating assets and liabilities, net of effect from acquisitions | ||||||||
| Accounts receivable | 2,004 | 38,260 | ||||||
| Prepaid expenses and other assets | (3,447 | ) | (9,157 | ) | ||||
| Accounts payable and accrued liabilities | (34,785 | ) | (8,812 | ) | ||||
| Related party payables | 391 | (642 | ) | |||||
| Additions to outsource contract costs | (304 | ) | (297 | ) | ||||
| Net cash used in operating activities | (45,990 | ) | (23,116 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant and equipment | (3,498 | ) | (5,766 | ) | ||||
| Additions to internally developed software | (820 | ) | (2,216 | ) | ||||
| Cash paid for acquisition, net of cash received | — | (3,500 | ) | |||||
| Proceeds from sale of assets | 4,252 | 38,222 | ||||||
| Net cash provided by (used in) investing activities | (66 | ) | 26,740 | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of Common Stock from private placement | 25,065 | — | ||||||
| Proceeds from issuance of Common Stock from at the market offerings | 18,118 | — | ||||||
| Cash paid for equity issuance costs from at the market offerings | (745 | ) | — | |||||
| Borrowings under factoring arrangement and Securitization Facilities | 66,098 | 149,951 | ||||||
| Principal repayment on borrowings under factoring arrangement and Securitization Facilities | (68,800 | ) | (66,114 | ) | ||||
| Lease terminations | (119 | ) | (331 | ) | ||||
| Cash paid for debt issuance costs | — | (12,708 | ) | |||||
| Principal payments on finance lease obligations | (5,600 | ) | (6,353 | ) | ||||
| Borrowings from senior secured revolving facility | 3,000 | 29,750 | ||||||
| Repayments on senior secured revolving facility | (55 | ) | (14,200 | ) | ||||
| Borrowings from other loans | 4,776 | 23,248 | ||||||
| Principal repayments on senior secured term loans and other loans | (18,076 | ) | (29,040 | ) | ||||
| Net cash provided by financing activities | 23,662 | 74,203 | ||||||
| Effect of exchange rates on cash | (51 | ) | 1 | |||||
| Net decrease in cash and cash equivalents | (22,445 | ) | 77,828 | |||||
| Cash, restricted cash, and cash equivalents | ||||||||
| Beginning of period | 70,309 | 14,099 | ||||||
| End of period | $ | 47,864 | $ | 91,927 | ||||
| Supplemental cash flow data: | ||||||||
| Income tax payments, net of refunds received | $ | 1,994 | $ | 1,339 | ||||
| Interest paid | 75,136 | 76,781 | ||||||
| Noncash investing and financing activities: | ||||||||
| Assets acquired through right-of-use arrangements | 2,159 | 772 | ||||||
| Leasehold improvements funded by lessor | 125 | — | ||||||
| Settlement gain on related party payable to Ex-Sigma 2 | — | 1,287 | ||||||
| Accrued capital expenditures | 1,505 | 1,088 | ||||||
9
Exela Technologies
Schedule 1: Second Quarter 2021 vs. Second Quarter 2020 and First Half 2021 vs. First Half 2020 Financial Performance
(UNAUDITED)
| $ in millions | Q2’21 | Q2’20 | H1’21 | H1’20 | ||||||||||||
| Information and Transaction Processing Solutions | 217.3 | 243.0 | 449.2 | 527.1 | ||||||||||||
| Healthcare Solutions | 56.2 | 49.2 | 107.3 | 113.2 | ||||||||||||
| Legal and Loss Prevention Services | 19.5 | 15.5 | 36.6 | 32.8 | ||||||||||||
| Total Revenue | 293.0 | 307.7 | 593.1 | 673.2 | ||||||||||||
| % change | -5 | % | -21 | % | -12 | % | ||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 209.1 | 241.8 | 441.7 | 534.3 | ||||||||||||
| Gross profit | 83.9 | 65.9 | 151.4 | 138.8 | ||||||||||||
| as a % of revenue | 29 | % | 21 | % | 26 | % | 21 | % | ||||||||
| SG&A | 36.4 | 47.0 | 78.3 | 97.4 | ||||||||||||
| Depreciation and amortization | 19.4 | 22.8 | 39.0 | 46.0 | ||||||||||||
| Related party expense | 2.7 | 1.1 | 4.5 | 2.7 | ||||||||||||
| Operating (loss) income | 25.4 | (5.1 | ) | 29.6 | (7.3 | ) | ||||||||||
| as a % of revenue | 9 | % | -2 | % | 5 | % | -1 | % | ||||||||
| Interest expense, net | 42.9 | 44.4 | 86.0 | 86.0 | ||||||||||||
| Sundry expense (income) & Other income, net | (0.1 | ) | (1.5 | ) | 0.2 | (35.1 | ) | |||||||||
| Net loss before income taxes | (17.4 | ) | (48.0 | ) | (56.6 | ) | (58.2 | ) | ||||||||
| Income tax expense (benefit) | 2.0 | 0.7 | 2.0 | 3.1 | ||||||||||||
| Net income (loss) | (19.4 | ) | (48.7 | ) | (58.6 | ) | (61.4 | ) | ||||||||
| as a % of revenue | -7 | % | -16 | % | -10 | % | -9 | % | ||||||||
| Depreciation and amortization | 19.4 | 22.8 | 39.0 | 46.0 | ||||||||||||
| Interest expense, net | 42.9 | 44.4 | 86.0 | 86.0 | ||||||||||||
| Income tax expense (benefit) | 2.0 | 0.7 | 2.0 | 3.1 | ||||||||||||
| EBITDA | 44.9 | 19.3 | 68.4 | 73.8 | ||||||||||||
| as a % of revenue | 15 | % | 6 | % | 12 | % | 11 | % | ||||||||
| EBITDA Adjustments | ||||||||||||||||
| 1 Gain / loss on derivative instruments | - | (0.4 | ) | (0.1 | ) | 0.4 | ||||||||||
| 2 Non-Cash and Other Charges | (0.3 | ) | 7.8 | 12.8 | (20.8 | ) | ||||||||||
| 3 Transaction and integration costs | 1.4 | 4.8 | 6.0 | 9.2 | ||||||||||||
| Sub-Total (Adj. EBITDA before O&R) | 46.0 | 31.4 | 87.1 | 62.7 | ||||||||||||
| 4 Optimization and restructuring expenses | 4.9 | 11.7 | 10.3 | 24.9 | ||||||||||||
| Adjusted EBITDA | 50.9 | 43.1 | 97.4 | 87.5 | ||||||||||||
| as a % of revenue | 17 | % | 14 | % | 16 | % | 13 | % | ||||||||
| 10 |
Exela Technologies
Schedule 2: Reconciliation of Adjusted EBITDA and constant currency revenues
Non-GAAP constant currency revenue reconciliation
| Three months ended | Six months ended | |||||||||||||||||||
| ($ in millions) | 30-Jun-21 | 30-Jun-20 | 31-Mar-21 | 30-Jun-21 | 30-Jun-20 | |||||||||||||||
| Revenues, as reported (GAAP) | $ | 293.0 | $ | 307.7 | $ | 300.1 | $ | 593.1 | $ | 673.2 | ||||||||||
| Foreign currency exchange impact (1) | (5.5 | ) | (5.1 | ) | (10.6 | ) | ||||||||||||||
| Revenues, at constant currency (Non-GAAP) | $ | 287.5 | $ | 307.7 | $ | 294.9 | $ | 582.5 | $ | 673.2 | ||||||||||
(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 June 30, 2020, to the revenues during the corresponding period in 2021.
Reconciliation of Adjusted EBITDA
| Three months ended | Six months ended | |||||||||||||||||||
| ($ in millions) | 30-Jun-21 | 30-Jun-20 | 31-Mar-21 | 30-Jun-21 | 30-Jun-20 | |||||||||||||||
| Net loss (GAAP) | $ | (19.4 | ) | $ | (48.7 | ) | $ | (39.2 | ) | $ | (58.6 | ) | $ | (61.4 | ) | |||||
| Interest expense | 42.9 | 44.4 | 43.1 | 86.0 | 86.0 | |||||||||||||||
| Taxes | 2.0 | 0.7 | (0.0 | ) | 2.0 | 3.1 | ||||||||||||||
| Depreciation and amortization | 19.4 | 22.8 | 19.6 | 39.0 | 46.0 | |||||||||||||||
| EBITDA (Non-GAAP) | $ | 44.9 | $ | 19.3 | $ | 23.5 | $ | 68.4 | $ | 73.8 | ||||||||||
| Transaction and integration costs | 1.4 | 4.8 | 4.6 | 6.0 | 9.2 | |||||||||||||||
| Gain / loss on derivative instruments | - | (0.4 | ) | (0.1 | ) | (0.1 | ) | 0.4 | ||||||||||||
| Other Charges | (0.3 | ) | 7.8 | 13.1 | 12.8 | (20.8 | ) | |||||||||||||
| Sub-Total (Adj. EBITDA before O&R) | $ | 46.0 | $ | 31.4 | $ | 41.1 | $ | 87.1 | $ | 62.7 | ||||||||||
| Optimization and restructuring expenses | 4.9 | 11.7 | 5.4 | 10.3 | 24.9 | |||||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 50.9 | $ | 43.1 | $ | 46.5 | $ | 97.4 | $ | 87.5 | ||||||||||
Schedule 3: Non-GAAP Revenue reconciliation & Adjusted EBITDA margin on Revenue net of pass through
| Three months ended | Six months ended | |||||||||||||||||||
| ($ in millions) | 30-Jun-21 | 30-Jun-20 | 31-Mar-21 | 30-Jun-21 | 30-Jun-20 | |||||||||||||||
| Revenues, as reported (GAAP) | $ | 293.0 | $ | 307.7 | $ | 300.1 | $ | 593.1 | $ | 673.2 | ||||||||||
| (-) Postage & postage handling | 52.8 | 55.2 | 59.3 | 112.2 | 125.0 | |||||||||||||||
| Revenue - Net of pass through (Non-GAAP) | $ | 240.2 | $ | 252.5 | $ | 240.7 | $ | 480.9 | $ | 548.2 | ||||||||||
| Revenue growth % | (4.9) | % | (12.3) | % | ||||||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 50.9 | $ | 43.1 | $ | 46.5 | $ | 97.4 | $ | 87.5 | ||||||||||
| Adjusted EBITDA margin | 21.2 | % | 17.1 | % | 19.3 | % | 20.2 | % | 16.0 | % | ||||||||||
| 11 |