XELA - Earnings call transcript Q1 2019 | Exela Technologies, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Exela Technologies First Quarter 2019 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instruction] After today's presentation, there will be an opportunity to ask questions. [Operator Instruction] Please note this event is being recorded. I would now like to turn the conference over to Jim Mathias, Vice President of Investor Relations. ahead. go Please

Jim Mathias

Jim Good Technologies Lindsay. here and to Officer; welcome by Financial Thank quarter afternoon XXXX Exela and Executive Chief first Cogburn, joined our conference the Chief Ron Officer. you, Exela's everyone Reynolds, call. today I'm

for strategies. as follows: today's in discuss financial Jim overview will provide Ron update and greater is quarter performance first then our results call detail. you agenda will an Our of on our our

broadcast investors.exelatech.com. also being via questions. Relations call Today's in replay May conference is Information press this until We on webcast, of which XXth available will Relations then website. on available year. listed is which today's release, to take your page available call Investor of A this live the Exela's the Investor access is of is be Exela's will website telephonic replay

statements Act assumptions. Exela performance risks and Litigation under call, Reform make that will on this known the that and subject These from and unknown materially be after to today's and based could the no characterized any any may results financial During future forward-looking of statements forward-looking as certain events are and Securities XXXX. undertake to Private differ current actual are events occur to expectations statements. forward-looking reflect call, uncertainties statements obligation and update We regarding

page associated website. along with available the the discussed most filings Relations of recently Exela's Copies with are risk release filed company's in information, on SEC more from factors to reports Form refer Exela's or SEC. For XX-K, the please and Investor the periodic the other press the

on measures. view between call of measures additional we can page found performance our the will the information non-GAAP discuss refer on on be today's Reconciliations financial We these believe non-GAAP management Relations call, provide and we business. website. During Investor operating our of results how GAAP to certain today's non-GAAP

the accessible Investor sheet, and press are in going website, as our slides release believe Relations we investor today's to our investors.exelatech.com. not press our During release with page stakeholders, In our on results refer are fact today's discussion, believe which review do result, and forward. combination a of efficient necessary expanded fact our please we for and discussion, more a sheet

now will our Ron? Ron begin by over call We CEO, to turning the Cogburn.

Ron Cogburn

and afternoon, today. Good everyone for thanks joining us

mentioned, review As available our to by on Jim had Investor website. opportunity just Relations I you've quarterly the materials hope our now

are and million, pleased grew basis, a we're We XXXX. adjusted the the year-over-year On excited currency with remainder grew of and constant X% EBITDA $XX results $XXX of revenue first of solid year-over-year. million quarter about our X%

of initiatives. first quarter in automation and adjusted the ramp path the of from executing XX Our benefits XX.X% an customers. that get points our traveling was and by through QX growing XX.X%, EBITDA to our was the improvement in Growth continued margin basis The remaining of of are existing we XXXX. savings transform validates cost as backed businesses our increase we profitable pipeline our margin

Our by win services. technology best-in-class support business Now our Digital and to continues leveraging strategy

the to accelerate customers engagements layers of technology multiple to across be digital through to Our and goal process transformation business continue is partner. and our automation their expanding

initial and service to have with customers, an new and As costs existing in acceleration we wins. grow continue seen we these our our associated

pipeline, fourth reaffirming on a we outlook. toward automation. forward of base we to materially our customers in continue quarter. based the our we going be are in expect revenue improve On a the year. to the an do working reverse path and These current a of sequential to have our QX employee lower have margin back-half and As we should similar have to basis, result, use and not trends seen third contracts capital. Accordingly, added exit increased XXXX where Further,

our to as added XXX we At ago, moment result headcount a a to end total FTEs. due of this employee to base rose our the XX,XXX, quarter, wins. these mentioned adding of I As

accelerate the awareness list, ranked number F&A from year categories solutions have BPS banking and is organization. on In was impact, the customer top capability solutions, the our capabilities transformation on insurance making Group our rising customers, progress XX, our of Our we and and strong working posted services. for are their the digital last Everest improving P&C before. This consistently year significant number healthcare we platforms, across vision our initiatives identified scores are XX multiple received. that process XX With strategy, digital such suites, and digital automation XXth we number have as market throughout well to from year executing Exela digital augmentation savings

the to and front user Office Office. In environment. with bring in can sign-on material customers the a to work of workplace. savings workflows million process on early our our execute by Office believe fact logistics to Office, disconnected interconnect drive overall the user to management, improve initiatives workplace expect connected XXXX, automation to and continues integrated of detailed we is transform the fulfillment registration devices In to and it offering in to suit next on-demand waste. office, revenue with The and to and a portion compliance. FTE. services $XX.X and was customers, EBITDA increased optimization. per EBITDA. in The utilizing transformation technologies energy with for favorable and wave are green our is of during convergence of previously With our demand created can facilities to to experience, products, Internet modern drive reduce supported helps Exela better Digital which provides the and visibility represents facilitate Smart the accelerate to remaining initiatives Smart Smart visitors the single which Exela's Exela's business automation to capability, adjusted included technology solutions office excited future We enhanced launched April, will increased conversations We're remainder and of experience. there sheet. our We Things execution the an identified Smart

Now to March From as QX X% in we $XX,XXX continued at of take annual some basis per FTE composition basis discussed per term of of be and to revenue want our year. few XXXX, on moment to I the trend briefly and call we by revenue on $XX,XXX. $XX,XXX, evolves, actual believe XXXX on the increased an FTE organic XX% longer should to XXXX this With that of a also an a cover statistics or our followed. our workforce I XXXX

reductions. the drives higher provide processes efficiency enable throughput, For automation example, in which Americas, headcount to and

such more. see In contract to grow implementing footprint our opportunity a to enables do Europe, workers bank As continue automation and Exela the I great this year, global we enterprise as contracts ramps revenue. mentioned our to our earlier

the I we have optimal which delivery cost customers with that a provides an On model the refresh drive essential opportunity rest and that on a we benefits revenue be as to believe toward progress a by basis, annual review and global want are well, metrics an the to to automation. at basis world, driven in structure. and execution. Exela's us few of is our customer Looking tracking us we location-agnostic, model geographic global the enables

our In base our provides high the us customer well an revenue, of Europe. our revenue. share revenue opportunity as revenue, and million to of statements customers. from XXX At generating XX% past, represent top the of with within our top-line the the our XXXX. top base found representing we We XX% discussed XX% Americas customers as have add XX XX have customers. was revenue, end in work $X revenue retention, increase diverse existing and our $XX a With of to from of with the at end first the of represent the end our our strategy wallet XX% quarter, our XXXX, had additional annual visibility diverse of top significant XXX in XX% customers of XXXX existing to now revenue is we customers million increase At

also customers to XX of and the the share. Both generating in reaching We and efforts XXX total $X wallet of $X increases million our customers customers grow over million within effectiveness gain $XX customers. demonstrate our existing added million, a

update. here's Now an

customers in and During XXXX, services the financial now These largest $X have When are five in look to additional and adding expected healthcare. positive customers industries have banking value. are value. which and million our contract over are And contract million annual serve, customers, pipeline the growing expected these annual I at to trends two are generate that over we additional first customers, existing existing we ACV, continue. now quarter I we generate we of $XX which will expect the in and

the hand results great now, who over digital our detail. to XXXX. off a on will and I in customers we are focused pipeline greater revenue our their We is transforming financial The And team Jim to transformations. in like Jim? discuss are would working to with into on Reynolds, start call

Jim Reynolds

Ron. Thanks,

million increase increase X.X%. of QX First quarter million, revenue XXXX, revenue a On totaled an $XXX.X million to $XXX.X in in $XXX.X an currency to was constant basis, X.X%. compared

in at QX by to North XX% XXXX. Europe mix this in Looking of XX% XX% was geography, Europe, and revenue and North XX% our America compares in in revenue America in

up X.X% Moving an driven ramp for impact model growth and increase of by segment contracts investments. our ITPS our million, of using the our segments. Now year-over-year of Digital was Revenue $XXX.X for

$X in year-over-year certain of million negatively currency low approximately ITPS exiting growth was contracts a and by margin impacted Our headwinds basis. on

$XX.X million a on $XX.X our in totaling quarterly first XXXX. quarter year-over-year X.X% from grew The segment expectations. Solutions the were Healthcare in up basis, results million, Our consistent with healthcare of

lumpy legal in revenue ACV for lower few in the or the were Loss project settled to first first to due and in and margins in compared and had to $XX in our to XX.X% have a not $XX.X the Results able to legal been of were decline and year-over-year segment. Gross lower XXXX. quarter replace. large cause million. are costs related Gross including half during of segment and can was revenue of revenue be XX% the scaling to a on event-driven higher between quarter legal revenue projects primarily that initial million XXXX We our Legal new that basis profit active base Our mid-year quarters. first quarter first margin Prevention XX.X%

in being driven the $XX.X expect company, and of state S&GA in as margins The public it savings in compensation revenue quarter as investment was steady million to and to $XX.X costs including XX.X% associated for revenue our our of related scale future, continued SG&A We totaled is of compared quarter first our to expenses. increase gross initiatives. facing higher by well higher of in revenue stock conversion as customer improve organizations XXXX. the a the with the

revenue was in the $XX.X first differences the offset savings partially growth in This and achieve the adjusted was quarter quarter adjusted detail EBITDA between by margin EBITDA I savings Our investments investments but to the in want between in flow made million, adjustment primary restructuring was it The and for realizations X.X% by XXXX. a of from continued XX.X%, of quarter an and related through, improvement for cost have EBITDA. XX.X% growth. EBITDA the of to variance company charges. by increase increase headcount. we mainly first the to totaled are a adjusted majority and margins optimization an driven to and relates two greater discuss made The

the expenses over million. a and additional as for totaled projects. increase During quarter, XXXX, first of incurring optimization QX restructuring few upfront large we costs This are $XX.X

continue in later in this decline trend but quarters. to year expect We XXXX,

significantly. from costs operations related to capital and first sheet. acceleration was approximately billion. due quarter This and the quarter an XX-Q revenue. end decreased first ramp flow and our working in million net flows of to was cash debt total from balance the was in our press the initial $XX $X.XXX Cash present in Liquidity usage Our of million release $XX.X at new

have we result, why employees This our and between receivable days. drag saw We payroll XX following are added biweekly and paid in approximately a as costs AR-related collections growth. with XX a XXX is

the addition, due approximately capital working timing by interest million In negatively of $XX was impacted to payments.

to the of is $XXX.X, the interest feel being and $XX new XXXX, X.X% taxes. in is to in CapEx year. million, remainder to slightly still ramps revenue. the total primarily quarter March Our At which July. $XX comfortable we was cash the XX, ramp for We with or unless earlier. of of payments big revenue NOL X% the X.X% balance of have of are the January every I our discussed due range, revenue offset available higher similar made FX percent approximately million future new contract This

Our in though purchase of buyback we not did in the program additional effect any on stock first shares remains XXXX. quarter

our third to first have materially QX changes late some year guidance. business QX strong revenue expect XXXX closing, the in current January. quarter, stages. With solid In Although in we week settlement of took respect any which our the improved place start and of a not pipeline, to QX to In XXXX. making and to XXXX, purchased based outlook, shares in in are to full XXXX the our fourth similar on be is of we we

results, Operator, the questions. are That we open with We revenue growth to comments. going our as and pleased for with drive forward. formal queue concludes our please EBITDA that, work

Operator

Thank you.

session. We now will question [Operator Dolev from from today the begin Please go Your Dan question-and-answer Instructions] Nomura. comes first ahead.

Dan Dolev

Thanks taking for guys. it. Hey question. my Appreciate

Ron Cogburn

Dan. Hey

Dan Dolev

of actually quick OK. exact the of M&A, that's give hope Can quarter. three got in us I I the questions. guys. Hey, impact you impact M&A the

Ron Cogburn

we the you With during question. acquisition we approximately spring, contracts X%. -- respect the growth was So, you impact year did rate the margin the to in our organic by offset exclude for if at thanks of exited low M&A, look ITPS, our contracts the the

Dan Dolev

But yeah low margin that's contract, the right, you— excluding margin Right. the that that

Jim Reynolds

That is correct.

Dan Dolev

Asterion it. million? $XX And at, than more terms what, Got Or was contribution? than like of that in less or

Jim Reynolds

No, range. that in out it specific was numbers for give we Asterion, approximately didn't but

Dan Dolev

I the And in look it. of sort like both and ITPS mean I three feel at segments, expectations. Healthcare sort roughly our Got If fared of with line you

this somewhat positive the like we driving expecting growth segment? what you and segment that Thank we growth quarter. from you. when below expect some If can positive was legal But was that were

Ron Cogburn

Thanks.

of lumpy. in revenue, really legal up in great doubles We that seen cases haven't the the there have notifications still historically. and not our the XXXX seen in related we've mid-year large hitting end revenue segment, to number cases finished but Within the state and we scale. just large cases have some is singles been We had the and project-based of a

a growth the think pipeline we're of given the opportunity second year. for in So, little while that disappointed, we half there's

Dan Dolev

Great. Thanks it. I appreciate guys.

Ron Cogburn

Thanks Dan.

Operator

you. Thank

ahead. comes question next with Cantor Foresi Your Joseph from Please Fitzgerald. go

Unidentified Analyst

Thanks is call. for on Kootman Joe. for Drew this Hi, taking our

to mentioned You in is now curious was remains changing just increase digital what on of I sort an pipeline now? the through maybe how pipeline just Or that? you're digital guys or due you pipeline strong. the seeing could seeing are you touch the

Ron Cogburn

is for And Now. Look, move we to a the Drew, growth I the that's right then beginning opportunities the year-over-year pickup I interest related in in doubled what our had we're question. conclusion the in see seen almost that quarter last And pipeline forward, previously all mentioned we Smart think Digital to Office. is as

from created dealing so level we've And all enterprise with that an of seen of these grow. think pursuit our strategic we've have reason pipeline other I teams our come part the with together now, the that's

that higher out higher a very of opportunity how So, a plays that or converting rate we we're opportunity to see because excited we have a for better pipeline. believe

Unidentified Analyst

and Okay. around update that? moving little forward And synergies, a you Excel expect synergies time the in the and then, I why could saw wondering regarding, I us slide some of the was on you but frame

Ron Cogburn

Yeah.

factory, our the savings. within we layout So,

we headcount. will we'll But this majority feel we cash in at because year primarily of XXXX does we that a be very results implement these to of cost it cautious to are good there our savings. in going approximately them these be $XX.X look taken in When have Now up. wrap million some and are now

going we're very to So, be prudent.

Unidentified Analyst

or on in like to healthcare. you compared actually forward thoughts if around more I healthcare on then that you sneak decent year. are touch healthcare Thank your growth had especially could expect And the It one I just what just if it if you. wonder could Okay. looks segment? moving last

Ron Cogburn

a us great we a continue forward will of moving the we asset healthcare, year. small the closed that gave healthcare at With partnership to excited It end Sure. leverage. on we're

feel about really healthcare. So, where a on we forward we positive are go basis in

Operator

comes Essex with question ahead. Stanley. from next Brian Morgan Your go Please

Brian Essex

you big I you Thank was I about little afternoon. existing within of able for for to account are you existing talk particular the pretty with the much pipeline how good know Hi, the How wondering a visibility the customers large could relationships recently question. customers that in your a taking win much new bit for had business year? some within? bank. guys the maybe with you does lockbox And penetrate

Ron Cogburn

this Ron. a conversation around that that the I is help and it's bank. good clarify let mean So, question Brian me big

that so service. is services Now to involved of lines through the will the our rollout So, has this Certainly in longer Digital platforms strategy is multiple place, there's technology remittance this processing more and this. begin customer But there customer. with our

and think land do grown ability to and you how existing when So, about the historically our been bank has to expand. has with we've it it customer through

a great because almost offering opportunity complex go We of be a example. reach did more a for them this a services us was and that entire in bank trusted throughout the So, to been your us years. customer handful able to integrated for two gave of organization. more had present They customer they would that and type

as they think mentioned it the quantum. last and time, the term increased sit So, as we contract so here much, the liked well they today we I of as

So, layer of when more have had to we color our that them which existing see pipeline, customer we've allowed opportunities the of question, it like our a relationship seven lots are now and us integrated is technology layers large we a at their similar, with in solution propose where stack. come to of the they great look all we uses this

to with and us seventh services fully they're our solutions. yes, our layer going our integrated think and the and I to technology be

using. sort really of that's So, a we're strategy foundational

Brian Essex

this better think pushes looking we XQ half year. I little the softer just the of the But bit of that, kind bit think softness some quarter, we kind the a or guess from the think end confidence in seasonality I you prior comfortable mean into of of pull I on of I be I quarter to pipeline year? And a into going pointed you Okay. through? that's little do seasonally to a actually do do get volumes think the of tends And conversations have how then back maybe how in with a to

Ron Cogburn

see Good of year half by confident the softness question. is This million And there's back back-end typically more in ACV. I'm due a year QX. growth. we've up $XXX.X the Europe although QX ramped of lot $XX we revenue of the some end closed the pretty million to We've but seeing material loaded, in in

Brian Essex

then related -- mean drag Jim. looks quick kind I capital does around maybe see do working How cash headcount around through compared kind the think on on out a mean sense and heads I really my you it And a the apparent million one just it the lower year? how about my of -- that on we remainder statement the not guess mentioned $XX get liabilities. of accrued for do head year the I about wrap payables do sheet? Okay. I last that I in I Where how of balance of reversing on like and to flow flow

Jim Reynolds

at to capital bond the third up to this impacts ramped these second it contracts. the bit of at overall quarter in we interest or Obviously so the comes comes payroll, larger but toward cash drag year. paying did of the fair beginning related mid, payment the back AR of the payment back Typically these the end of have a and amount projects balance, which in with quarter. We little Sure. starts large our do We that reverse. and this a quarter drive we're our we back have a working then

Brian Essex

Right.

payment bond AR of balance, the larger it we're this the end working or second in you back impacts beginning related in helpful. We at capital toward interest so payment amount paying we large and of that's bit to drive this with that the reverse. these have We then to the Thank comes and did do back our the year. the back we Obviously comes ramped cash the fair a contracts. very at much. which quarter. a third overall drag little starts projects our quarter have Okay, but up Typically payroll, a mid, Sure. of these of quarter

Jim Reynolds

you. Thank

Operator

next Citigroup. Thank Please from The you. ahead. Phipps [Operator Instructions] with comes question David go

David Phipps

Hi, thanks my for question. taking

three perform? flat flattening or how -- big things of will look we the of sequential would the the We kind over sectors? different out progress the there side when And anything from So, litigation or it about you the to businesses be two business, quarter-to-quarter. expect expect of in small the is some general at is change over

Jim Reynolds

we've So, how but by guidance within it give you grow from baseline legal growth good think as really we down our then our converts a we've if hope from legal position year. specific feel little within our slightly from quarter-to-quarter, ramping here seen least a ITPS perspective. revenue Within of We look this and is historically, group. kind been within about healthcare the we at the don't lumpy segment, pipeline gets our to this and

David Phipps

make Okay. the And nice continue then in quarters. in if some you be to the progression margin of we progression, margin even would revenues to look quarter, some made progression you've And past June flat? will roughly though the expect margin at five

Jim Reynolds

guidance, of as give we take you'll put margin through see saving sold, our and end headcount, flow So, those out out through of expect. which you technology cost the P&L, we initiatives goods and turn, I as the we start is, specific but the a would tell majority our what don't quarterly to gross run people

David Phipps

unless business, you seems have X,XXX you a if it you're flat, that of you're but to Because margin talk that? like new during savings some quarter, employees or more to that about up have can to Okay. have have cost suggest offset we little little that are that you added you a through because bit, bit going pressure set a the we're cost of little that extra for maybe would employees going bit so that

Jim Reynolds

technology expansion. these in in about We've we added which said employees, hit see production start and contracts, benefit our almost the state put are Ron in and we the cost ramp margin area. as steady in our the absolutely. to XXX all Yeah like And revenue

well we're respect contracts. with way to under these So,

David Phipps

outlook, now? the M&A Okay. finally the then on And for pipeline look Exela how's right

Jim Reynolds

There's the not So, a this year of we're our as for going as any anticipating but part end said QX deleveraging. of to really always on acquisitions. we at them, guidance, pipeline we're focus

David Phipps

Those right. Thank you. are questions. my All Okay.

Jim Reynolds

you. Thank

Operator

Thank you.

Eric Your Please next question Barrasso comes with ahead. from go Jefferies.

Unidentified Analyst

question company? one, things. talk of This here. they've high. a forward? defined the are? the Two people have to being of -- little lumpy. And -- kind little the mentioned Number restructuring of those the kind been you that's kinds call. can and overall of question. the of in a us mean of options bit and is actually is might it any other costs are give as I and integrated How as I optimization those guess understanding talked bit those any you've there Todd the But a there more how look is about that story was part the and and Morgan. for growth is of it's kind we what you of Thanks persistently What rest question. Thanks. important you a process. optimization salary legal those that about folks kind are, could division kinds trend of again that you that How of the people I business with the that expenses for Are hoping as benefits company? consider, might second first you've

Ron Cogburn

in mix. our legal, that fair solutions segment, we a are the cetera et opportunity, significant gone legal our and ITPS. being within firms we've law They have brought With of into view we amount Sure. business Good respect included enterprise with questions. when to

not We there's a a leveraging location So, see as that we with opportunity to relationship, still expand it's from somewhat it that separate. by revenue opportunity significant or integrated Legal an facility relationships. although our completely synergy view Services those

Unidentified Analyst

That makes sense.

Ron Cogburn

about responsible tell addition, excited drive addition, what new we our business hired In us in that -- having him individual legal to and help I onboard. you will are

question are charges. I think the restructuring and related restructuring. and primarily the second optimization Optimization headcount to related charges

productive a to as solution you manage solution, headcount. technology, out time ability more not have have a put the non take need in to digital you for transition we we we and -- analog start the as people type probably and doing to As services

clients lot in Exela a able in of of in addition perform putting our these and technology technology being we're suite cost that to In the part overall to third there's that used party reduce services.

of little expect look these at take a optimization large time us projects, So, good, through. as some optimization to you we down the work trend feel it'll we quarters. to have But if we over

Unidentified Analyst

Okay. That's again. helpful. you Thank

Operator

Thank you.

have [indiscernible] last with Matrix from question one go Please ahead. We Matthew Financial.

have for over to been turn closing this to session. back I Ron conference would Sorry, I our like concludes the question-and-answer any Cogburn advised, remarks.

Ron Cogburn

of everyone course, shareholders everyone the technology thanks Dallas, Yeah, London, quarter area, for the analysts and Angeles. next Thanks and and in by visit any with in New to and the with Los to We and are They again extend you us invitation speaking at over our Amsterdam centers, joining today. of our look to always come innovation York goodbye forward we an centers.

Operator

conference now presentation. today's attending Thank The has for concluded. you

disconnect. You may now

Exela (XELA) 12 May 192019 Q1 Earnings call transcript