2020 First Quarter Revenues of $246.0 Million, up 2.7% year-over-year
Q1 Diluted EPS (GAAP) of $0.65, up from $0.42 in Q1 of 2019
Q1 Adjusted Diluted EPS (Non-GAAP) of $0.81, up from $0.71 in Q1 of 2019
New York, NY – May 7, 2020 - ExlService Holdings, Inc. (NASDAQ: EXLS), a leading operations management and analytics company, today announced its financial results for the quarter ended March 31, 2020.
Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “We started the first quarter of 2020 on a strong note built upon the momentum we had achieved in 2019. However, in the last two weeks of March, we were affected by the COVID-19 pandemic and we finished the quarter with revenues of $246.0 million, up 2.7% year over year. Adjusted diluted EPS increased to $0.81, a 14.1% increase, despite the sudden impact to our revenues and additional costs of rapidly transitioning our global work force to a new ‘work-from-home’ model.
“EXL’s employees have demonstrated ingenuity and creativity and risen to the challenges presented by the COVID-19 pandemic. We acted swiftly, to ensure the health and safety of our employees and partnered with our clients to achieve business resiliency with minimal disruption. As of today, we are able to meet over 95% of our clients’ delivery needs with the ‘work from home’ model on a global basis.
“The scale and speed of the disruption caused by COVID-19 has forced every business in the world to take a hard look at their operating business model, reinvent core functions and quickly adjust their cost structures to more closely align with the updated revenue expectations.”
As part of this effort, today we announced that the Company’s executive management team had recommended to the Compensation Committee, and the Committee accepted, temporary salary reductions for the Company’s senior leadership. Synchronous with this decision the Company’s non-executive directors have accepted a temporary reduction to their annual cash retainers. These reductions were effective May 1, 2020.
Maurizio Nicolelli, Chief Financial Officer, said, “We ended the first quarter of 2020 with a very healthy balance sheet and we feel confident about our liquidity position going forward. On March 23rd, we withdrew our initial 2020 guidance in response to the changed circumstances resulting from COVID-19. Our revenue and profit visibility for the remainder of 2020 is subject to numerous factors including client demand, the utilization rate of our employees and local and national guidelines for unlocking various global economies. For the second quarter of 2020, in light of the COVID-19 pandemic, we expect a revenue decline of approximately 15% compared to the first quarter of 2020, and adjusted diluted EPS between $0.20 and $0.40.”
Financial Highlights: First Quarter 2020
Effective January 1, 2020, we made certain operational and structural changes to manage and report financial information through our four reportable segments: Insurance, Healthcare, Emerging Business and Analytics. Financial information for historical periods are recast to conform to the current presentation. For details regarding the change in segments, refer to our quarterly report on Form 10-Q for the quarter ended March 31, 2020. Reconciliations of adjusted (non-GAAP) financial measures to GAAP measures are included at the end of this release.
- Revenues for the quarter ended March 31, 2020 increased to $246.0 million compared to $239.6 million for the first quarter of 2019, an increase of 2.7% on a reported basis and 3.4% on a constant currency basis from the first quarter of 2019. Revenues declined by 4.2% sequentially on a reported basis and 3.8% on a constant currency basis, from the fourth quarter of 2019.
- Operating income margin for the quarter ended March 31, 2020 was 11.2%, compared to an operating income margin of 7.0% for the first quarter of 2019 and operating income margin of 9.1% for the fourth quarter of 2019. During the quarter ended March 31, 2019 and December 31, 2019, we recorded impairment and restructuring charges of $1.2 million and $1.4 million, respectively, related to the wind down of the Health Integrated business, which reduced our operating income margin by 50 basis points for both the periods. Adjusted operating income margin for the quarter ended March 31, 2020 was 14.8% compared to 12.8% for the first quarter of 2019 and 13.3% for the fourth quarter of 2019.
- Diluted earnings per share for the quarter ended March 31, 2020 was $0.65 compared to $0.42 for the first quarter of 2019 and $0.62 for the fourth quarter of 2019. During the quarter ended March 31, 2019 and December 31, 2019 we recorded impairment and restructuring charges of $1.2 million ($0.9 million net of tax) and $1.4 million ($1.0 million net of tax), respectively, related to the wind down of the Health Integrated business, which reduced our diluted earnings per share by $0.03 for both the periods. Adjusted diluted earnings per share for the quarter ended March 31, 2020 was $0.81 compared to $0.71for the first quarter of 2019 and $0.79 for the fourth quarter of 2019.
Business Highlights: First Quarter 2020
- Won 10 new clients in the first quarter of 2020, with 5 each in our operations management businesses and Analytics.
- Recognized as a Leader in Everest’s 2020 PEAK ranking for Property & Casualty (P&C) Insurance BPO Services.
- Appointed Anita Mahon to the role of Executive Vice President, Chief Growth and Strategy Officer and member of the Executive Committee.
Post-First Quarter Highlights
- In April, we repaid $100 million of amounts previously drawn from our Credit Facility in March to address cash needs due to the COVID-19 pandemic. We continue to have $200 million available from our Credit Facility.
ExlService Holdings, Inc. will host a conference call on Thursday, May 7, 2020 at 10:00 A.M. ET to discuss the Company’s quarterly operating and financial results. The conference call will be available live via the internet by accessing the investor relations section of EXL’s website at ir.exlservice.com, where an accompanying investor-friendly spreadsheet of historical operating and financial data can also be accessed. Please access 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 1-877-303-6384, or if dialing internationally, 1-224-357-2191 and an operator will assist you. For those who cannot access the live broadcast, a replay will be available on the EXL website ir.exlservice.com for a period of twelve months.
About ExlService Holdings, Inc.
EXL (NASDAQ: EXLS) is a leading operations management and analytics company that helps our clients build and grow sustainable businesses. By orchestrating our domain expertise, data, analytics and digital technology, we look deeper to design and manage agile, customer-centric operating models to improve global operations, drive profitability, enhance customer satisfaction, increase data-driven insights, and manage risk and compliance. Headquartered in New York, EXL has approximately 32,800 professionals in locations throughout the United States, the UK, Europe, India, the Philippines, Colombia, Australia and South Africa. EXL serves multiple industries including insurance, healthcare, banking and financial services, utilities, travel, transportation and logistics, media and retail, among others. For more information, visit www.exlservice.com.
Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to EXL's operations and business environment, all of which are difficult to predict and many of which are beyond EXL’s control. Forward-looking statements include information concerning EXL’s possible or assumed future results of operations, including descriptions of its business strategy. These statements may include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although EXL believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect EXL’s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors, which include our ability to successfully close and integrate strategic acquisitions, and our ability to respond to and manage emerging public health crises, including the outbreak of the novel coronavirus (COVID-19), are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K and EXL’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. These risks could cause actual results to differ materially from those implied by forward-looking statements in this release. You should keep in mind that any forward-looking statement made herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect EXL. EXL has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.
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