KLDI - Earnings call 1 2021 | KLDiscovery Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the KLDiscovery Q1 2021 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Dawn Wilson, Chief Financial Officer. thank you, and please go ahead.

Dawn Wilson

operator. you, Thank QX KLDiscovery's Call. Welcome XXXX to Conference

of or uncertainties call of undertakes obligation future forward-looking these our statements risks earnings update These detail issued to in differ with statements. guarantees not forward-looking the and today. forward-looking assumptions, statements to and are press statements due are performance. in no these made clarify from described more Today's as materially contains that yesterday Actual filings release may results KLDiscovery SEC. amend,

During Reconciliations call, present GAAP release definitions issued financial most detail this EBITDA financial will we non-GAAP along including adjusted for night, in those last comparable terms. call, non-GAAP and measures, also in prepared in not EBITDA, measures our accordance which this shown with discussed measure directly to press were to the with on GAAP. the are

financial our to that of investors presentation our believes results regarding information Management provides operations. of non-GAAP useful supplemental measures

not addition measures financial Please should non-GAAP replay and release GAAP last any superior refer Our substitute on considered to measure. access call. night's only in for of to the to, press or to, as how be this a

turn to Chris our call will Weiler. the CEO, I now over

Christopher Weiler

much Dawn, name Results morning, thank you, and for KLDiscovery. of and CEO XXXX Co-founder Chris and Thank I Quarter joining Weiler, Conference you good First is very KLDiscovery's My and Financial Call. am the

the with software leader and corporations, global grown technology-enabled with solutions to the client complex world-class services service. spanning client own provider our a provides the largest a have is global that which proprietary and be providers we entire footprint, the by government challenges. EDRM, agencies is hardware. XXXX, its firms, world-class complemented is one consumers and help eDiscovery industry KLD of in only and service Since KLD law data software to technology, solve

with new performance pandemic I past optimism. beyond as and KLD the with challenges begin global from am the excited team our about to hope so of continued we look

data business. We have laser-focused as technology consulting making momentum global an truly KLD team our amazing entire amount of is unique on a

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the is desire. Our make wherever to and goal our ecosystem Nebula clients however accessible

technology incorporates hardware what further and input and suite and and our to of clients products truly prospects align is software, needs the full services road Our from proprietary wants. market map dynamic our with

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in has is XXXX since first results world our a not approaching prepared quarter the the increased particularly for returned Our quarter. global of first with levels usual. are in is the truly XXXX. and, business future quarter pre-pandemic This the Revenue impressive hard the to the as ready consecutive This work of yet KLD to some achieved KLD But team. is for go. and testament on cases, to normalcy third exceeding the horizon,

and back results the XXXX, a opportunity. we situation transformative Since in our fought consistently a turned hit QX financial pandemic difficult have into

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in took as and net XXXX credit and amounts our cash are million and that with million COVID-XX. ended facility cash draw QX Our in to facility. strong revolving drawn of the compared $XX.X on $XX.X on quarter when impressive ended first particularly no we equivalents which is revolving million $XX cash and equivalents, precaution cash XXXX, cash credit our $XX with position the as we liquidity million of This from

XX.X% that to as continued continue cash I'm very improved -- high reductions. QX XXXX and the from operations due This improve cost cash first flow to sorry, receipts quarter compared to XXXX. we is pleased of XXXX

and and Our saw third momentum were able activity of we pipeline we sales remains to upon strong, quarter the build XXXX. in

successful and continue our partner. products calls make only services the into greatly have we better calls to helping in translated can with a their are are of learning I development and also prospects XX an so our the and I these discuss spoken at future clients, to over KLD develop service activity. Not we client effort they decision-makers needs in are and clients seeking business to but they what succeed. offerings, industry have learn

our continue we more in XXXX, people. technology to invest even and In

gain Our and is share. Nebula platform continues Nebula grow industry. to our and in platform gaining rapid been has acceptance market proprietary the

in were mentioned our in million, highlight I I with a able lien of million, annual our increase debt our to $XX happened refinance it capacity quarter million delayed since including reduction the XXXX, know a $XX payments, draw $XX amortization call, but million $X an better we increasing of and we revolving million, wanted to our to it on credit $XX with to terms, last line term of from increasing loan. first that while first further

results, liquidity. I us revolving our and hasn't impact our slowed on in surge and have business. We XXXX facility, a am We will with with believe I of our momentum, down. drawn flexibility which with positively credit the it provides entered financial and economic exceptional pleased thus coming activity lot nothing

in ships company, In fact, it for what we are True and accelerated have defined all has as the sailing direction. that is North

sharing where heard for tremendous a system, they strong and use feel voice numerous which of global maximized fireside our town global in and communication a informed of chats, we collaboration to share been team feedback. important tools calls, and like the other Communication halls has opened tools, my keep can has company, video file huddles. and and X-way chat employees to up recorded We point be continue always have meetings a the

took XXXX, level. another and In communication we to collaboration QX

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are subcommittees committees the organization In the their order to achieve take for numerous and involving of over XXX meetings of regularly involved, executing X on every of ad the items to that sales to to hoc to and that All tackle are have held meetings X are finance meetings. aspects formed responsibility from weeks, come from development of much XX around more. to and marketing specific strategy. daily portion out technology held combinations we globe goal, leaders Team the to

company the is always within ever. now but than was better it excellent, Communication

take I'm people honest result accelerating. and even more transform I extremely company we be to is are can start day. working where And the This and empowered, extremely every to moving And at Importantly, that and with the positive about the are you, we is encouraging can't rate. wait a industry. initiatives faster ahead

blue the I the intuitive client-centric. by that's from business. truly experience sure something a ocean pack X.X. different, We going and to the lead others. We're the to outthinking is to something to create is like opportunity to industry We additive out-innovating believe away this the make pleasing, perfect want their would and and KLD user pull for level seamless, to

speaking the looking the Over quarters, specifics about next to unfold. couple of they as forward I'm

We reopen can the states to getting normal thinking begun massive have confidence. to as program start immunization as national contributes about back many to

a work done we positive benefit will in hard The for is KLD. have future. to the this of date KLD All

and for the We or for are other acquisitions, more reviews requests and second cases ready more matters to defense generally. demand meet government joint mergers growing

also We information our in the future. increase in to governance plan the presence

expanded just We for better version much we also an than demand a technology is we benefit increase from our from of as opportunity will in And grow economy. the believe solution. an customers complete believe bigger KLD

XXXX, In a momentum against the energy quarter, of great was [ way skill and ], believe and technological the incredible. our on another our level. to advancements I the our are we competition. KLD. QX taking Hail pedigree to well and are in technology superiority

I will now to Wilson. our turn the Dawn CFO, call over

Dawn Wilson

Chris. you, Thank

cases, had earlier, we the exceed COVID-XX approaching in said quarter are as pre-pandemic XXXX. of rebounded the nicely XXXX, very QX and, Chris strong numbers have we numbers some depths the a QX and our As first downturn of from in

once to We growing as earnings. more again steps positively pleased liquidity continue that a our that financial in with results. this I am And company ensure to reflected management has while increased operate take team efficiently, been will the

this savings the operational team during business the the our into we success continued remain execution identified as cash and factors drove of major and management proactive cost generated by Our business. in the pandemic KLD excellent efficiencies,

In Chris from achieved press had of We as and financial third release of quarter to our first low our QX quarter XXXX of revenue yesterday, strengthen 'XX QX million. the 'XX. earlier, continue pandemic highlighted improvement the our results in $XX.X as point revenue consecutive we

result and 'XX, larger is QX reopening, great to has COVID-XX closer with economy with been X.X% beginning markets revenue It the that and the like widespread openings forthcoming QX is is but acceptance, only compared at continue get down met as 'XX remarkable, were program strong. be We broader the vaccine to considering our rates to York New of general L.A. to normal. the see vaccination that

our protect efforts along result our improved 'XX operations financial systems, by Strong QX improved QX receipts from 'XX. cash balance in XX.X% high flow reductions. strengthen to and continued team have compared liquidity by sheet, cost the and in KLD Cash with to to

in quarter of credit QX, our we momentum strong we XX, cash facility. a ever our as our revolving is million on was have enter strong in nothing had $XX.X providing cash QX. We $XX and as Liquidity and March cash collections drawn equivalents million as particularly XXXX, best March with

QX and when for you exclude cash $XX.X the of QX drew than issues have equivalents protect QX Cash is arisen out could million caution in of credit on against facility. revolving that cash We the 'XX from of revolver higher to $XX.X million flow the COVID-XX. 'XX the $XX.X 'XX of potential abundance on drawn $XX million, million

financial covenants. last giving on KLDiscovery's increases debt able revolving mentioned February, favorable we from loan million We refinance a credit entered $XX terms new liquidity more to to our million, and we first that in capacity agreement our us into additional lien credit As flexibility. $XX secured and with were call,

debt We lowered million $X annual our also payments amortization. principal million, to with reduced $XX from

a the numbers. at closer look take Let's

$XX.X second of increase an was first XX%. the Our revenue to down continues to revenue quarter X.X%. recover from to growing This quarter Compared from of $XX.X 'XX, is XXXX. XXXX, in million the million by of QX

in achieved revenue the quarters we We prior per levels COVID-XX, approaching quarter. X are still $XX averaged we in to million the revenue where

$XX.X debt our the debt, part As $XX.X lowest extinguishment loss and that a of net million first million for would net X loss which $X.X million in lien XXXX QX to in and 'XX quarter $X.X first recorded the approximately loss have charge, QX we increased compared 'XX. to record-low Without of million refinance, had the years. of charge our we net in

up and was of 'XX to XX% in EBITDA 'XX. in increase million both for QX grew was million, adjusted up is to QX 'XX. 'XX adjusted EBITDA to $XX.X which EBITDA was EBITDA compared to and up $XX.X $XX.X million the of EBITDA 'XX to QX an million EBITDA quarter's XX.X% QX XX% QX margin 'XX compared last of 'XX $XX.X first of XX%, quarter compared of XX% compared million. QX margins in from $XX margin

in development. significant research continue technology will we and and customers invest change technology our our In XXXX, importantly, believe interact and services. Most with the we way investments products our to

will this to profits. strong occur and if expect any, little, our We margins disruption with

release our our are press provide COVID-XX. Chris we to discussed, our night, limited last for currently are Consistent in we XXXX. last not call, with stated the impacts ability we as to in financial discussed earnings and As we guidance predict financial on of continuing accurately what results

From the by some positioned of remains tailwinds believe future. XXXX some to beginning be COVID-XX we we begin the to rates at continue a and well many positive operating there signs, see the hope gives appears lift challenging to for may and we states perspective, restrictions us be optimism and for After vaccines, slowing pandemic, driven KLD year, macroeconomic that guarded infection as economic beyond. very an

the open call now We will to questions.

Operator

Instructions] of question Securities. comes Gibas first from Greg [Operator with Northland Your the line

Gregory Gibas

about down growth First, are your that very in revenue year slightly should levels wanted still to as QX still XXXX on kind relative beginning general think see more get there lap pandemic-related activity as directionally, of we of year-over-year, thoughts revenue sequential to the ago. QX litigation we opening up? in With weakest quarter to, a things

Christopher Weiler

our but say we to dramatically is we're I that Yes. pipeline I further QX that seeing would the improvement QX. think in in from continue see trend of XXXX,

Gregory Gibas

Okay. then, levels? kind the of maybe you compared guess, are that X% year-over-year, commenting pre-pandemic to you're And down litigation Great. on I with of revenue seeing activity relative comfortable level

Christopher Weiler

say we're it's getting close. that XXX%, I would but not back

Gregory Gibas

year, enough. Okay. or I was seemingly of growth if worst behind high-level or from you maybe strategic the With part XXXX, a could discuss us now, initiatives top just comment Fair this wondering initiatives perspective? your

Christopher Weiler

Sure.

other on X-star experience and service. great a on with KLD in client we're That solutions As calls, past discussed make top We experience of one a plan we've ton with KLDiscovery making the laser-focused programmatic automation is that the effortless couple certainly a to one. of using with an priority.

In we or by and server to ecosystem prospects cloud talked about clients that addition in a obviously host with tremendous data on-prem want or with our device. a plans, rack-mounted how future portable with whether have growth is the they that, to Nebula or the and important providing to our optionality,

not one multiple we to target as use we of want and sure cases that So each in can use and cases industries optionality we our customers we that those the of much are there as cloud-specific, that and a make our but prospects give possible. cover know just

Gregory Gibas

just XX% a improvement regarding great the question in Okay. from I found year-over-year And -- that cash then, quarter. Great. I in see here to operations ] guess, [

you if okay? can As just going me we the maybe to what degree? whether give expect And you think hear trend so, temporarily sense of is still then OpEx going us spending reducing Can forward, about the expenses how to a And you company forward? during maybe would guys pandemic?

Dawn Wilson

sorry. Oh, I'm sorry. on mute, I was

Gregory Gibas

no Yes, problem.

Dawn Wilson

down a a which we about we we versus had realizing temporary the benefit cost SG&A, COVID, XXXX, reduction for of instituted we in you in in a because Yes, quarter, -- from implemented minutes, goods reaction same couple talking reductions, been so also if years. that if and sorry as I've right, in quarter now. they're And almost sold of see recall, numbers permanent prior first you that. you then over and look are million our to the can at the $X

in some the the to permanent integration, permanent those lower and So to you'll numbers, and related the recovery those reductions our the data headcount year. reductions real estate continue are in travel reductions, see throughout numbers

Gregory Gibas

a We're it. I That's the just Got segment come waiting of regarding Okay. helpful. to then, data. kind guess, out. And for follow-up XX-Q

you the quarter Just wondering operating performance maybe out break could the by segments? the X if in

Dawn Wilson

Sure.

quarter largest revenue. or Managed $XX.X which services of review, about which managed data This XX% million It the million, our is QX, revenue. quarter. review around total was came XX% in our was technology total included was $XX.X in company's in services, recovery our for revenue for our history. million. legal was So of XX% Legal technology $XX.X is our about total of

over still $X.X 'XX So increased by that we're legal by decrease recovery smaller the million -- improvement a quarter. it's 'XX, X%. QX of seeing and still each but just But growth, data decreased technologies X% seeing we're QX

data level. to increase at the revenue EBITDA with closer were the pre-pandemic LT get So continuing recovery -- to and are continuing pre-pandemic level, or streams

Gregory Gibas

the platform? those you're customers elaborate whether talked one kind Nebula the adoption there. and could remarks, or hearing regarding about breakout you I it's helpful, on last are that's Okay. platform nice who Yes, prepared me, of if ecosystem was Nebula Chris, seeing on from adopting from seeing wondering you Great. what that, just I your maybe trends. guess in

Christopher Weiler

Sure.

So is we all we Nebula XXXX. platform address the to in the platform our It the use designed cases back requiring. that introduced see customers

a attractive portable model single completely or Nebula, extremely or use a I that feel deployment customers. gap put centers be in firewall for different a global we So Azure our that's data hosting whether we one cases, said as hosting across X server us of can cloud before, Microsoft a solution, in with behind or our rack-mounted people's with device on-prem like air that is

And and do talking as prospects CEO folks, to and spending gathering can we prospects want. tremendous to information. with in only one-on-one archiving. have we of from industry our but addressable clients platform community work experience a We really folks with calls a use compliance input this bigger the be asking just receive socializing our them needs, and total with and want adapt and amount want they market wants governance, and out that cases, talked I'm whereas certainly platform, to We them my with on we're in time gone And the our not this and mold our clients tool collaborative what us. to be a the what to environment across and and, legal X we information

is And being a programs underlie have think I have the follow this we of asking Oracle truth, think tremendous that have point instance, the have is that where adoption of able the platform approach, certainly, And with the few perform to we for. meaning in address those we us we you that needs are have that that track the billing, that sources company people X service worked client when reaching very kind from are globe and with same help to Salesforce I across global we workflow specific globally. that coming operations

never before. an that from industry that, has And happened really, perspective,

that our for global portal clients, that clients, assigning client through to possible and our money team, experience unique answering unique pulls a our really data X-star feel we provide operational as billing collecting this our through from as managers, position systems project legal a in continue we're to service on to of be basic through really to much able automate make project introducing of questions and that the or we're quarter, to looking industry. onboarding that focus automate just we are so So in we like the be that as onboarding to to whether of the

or tremendous threads, an they then be the need, a whatever that they that taking latest that, get interest their it lot having from what collaborative automation of whether numbers giving be may about. whatever any I cases, With the be legal project want, really behind from. job, build all can be portal that And all that coming or excited really curtain, the people their management client MSA be to about from. is us information listening the gives about the adoption inputs them where really our in this metrics and that's incorporate where what agreement, people folks, may as answer, platform, you it industry know in I but a long-winded and are to And in we SoW think

Operator

comes Your next of from question Walleye. the with Tim Casavant line

Tim Casavant

you the did you a lien Similar to convertible? first refinancing considered what the transaction just with debt, for guys have

Dawn Wilson

structure. certainly we will capital continuously assessing the change our inform any structure, capital we at And that that our to we're make decisions So point stakeholders.

Tim Casavant

Okay. about acquisitions And you actively? looking then guys yourselves at how would other you Are thinking any candidate? question you consider as takeover guys are is, Or M&A?

Christopher Weiler

color one. that I'll some and And add can context. take Dawn, you

Dawn Wilson

Sure.

Christopher Weiler

creativity we our sustained an I the super executing multiple at this behind and layer your tremendous is provide the XXX% and in think fruition valuation As eDiscovery that I organic We is innovation think have going point about as second initiatives. really foundational as this to answer this And on we talked technology focus company buying themes point the is technology our that time. increased more and that question, I than in plan think build growth something important strategic hinges time. increasing of point plan quality on of us it's at perspective, can't business, for to part X in another KLD. And a far different From time. at before, the

and to the focus technology growing both client in on services. work really X-star is and quality one just super, company a is business, Our making both service that super

Operator

this over closing any questions remarks. further to now And the at will for call back there no speakers turn I time. are the

Christopher Weiler

much joining to so Thanks Sure. this we Dawn, say call the for words want as sign you off? everybody a morning. do few

Dawn Wilson

look to everyone, the speaking you, you Thank forward call. to Thank and next we you. Sure. on

Operator

This today's call. does conclude conference

disconnect. now You may

KLDiscovery (KLDI) 13 May 212021 Q1 Earnings call transcript