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8-K - FORM 8-K - EBIX INC | c21162e8vk.htm |
Exhibit 99.1
EBIX ANNOUNCES RECORD OPERATING CASH FLOWS
| Revenue of $42.3 Million, up 31.2% Year-Over-Year |
| Net Income of $22.3 Million, up 59.5% Year-Over-Year |
||
| Operating Cash Flow for Q2 2011 of $19.6 Million, up 22.2% Year-Over-Year |
ATLANTA, GA August 9, 2011 Ebix, Inc. (NASDAQ:EBIX), a leading international supplier of
On-Demand software and E-commerce services to the insurance industry, today reported record
financial results for the second quarter of 2011 and will host a conference call at 11:00 a.m. EDT
(details below).
Ebix delivered the following results for its second quarter, fiscal year 2011:
Earnings per Share: Q2 2011 diluted earnings per share rose 48% year-over-year to $0.53, compared
to $0.36 in the second quarter of 2010. For purposes of the Q2 2011 EPS calculation there was an
average of 42.3 million diluted shares outstanding during the quarter, as compared to 39.3 million
diluted shares outstanding in Q2 of 2010.
Operating Income: Q2 2011 operating income was $18.6 million, an increase of 43% on a
year-over-year basis, compared to Q2 2010 operating income of $13.0 million. The operating income
included a gain of $1.9 million from the reversal of contingent earn out accrued liabilities
related to a few acquisitions made in 2010. The Companys Operating income excluding this one-time
non-recurring event was $16.7 million for the quarter, accounting still for a 40% operating margin.
Revenues: Total Q2 2011 revenue was $42.3 million, an increase of 31.2% on a year-over-year basis,
as compared to Q2 2010 revenue of $32.2 million. During the six months ended June 30, 2011 revenue
increased $18.5 million or 29.0%, to $82.3 million compared to $63.8 million during the same period
in 2010.
Expenses: The Companys operating expenses for the quarter grew by 23.2% to $23.7 million as
compared to $19.2 million for the second quarter of 2010.
Margins: The Company reported an operating margin of 44% for Q2 2011 as compared to 40.4% for the
same period during 2010.
Cash Flows: Net cash provided by the Companys ongoing operations in Q2 2011 was $19.6 million, an
increase of 22.5% year-over-year, compared to 16.0 million in Q2 of 2010. During the six months
ended June 30, 2011 the Company generated $29.9 million of net cash flow from operating activities,
as compared to $23.8 million in the first six months of 2010.
Net Income: Q2 2011 net income was $22.3 million, an increase of 59.5% on a year-over-year basis,
as compared to Q2 2010 net income of $14.0 million. Net income for the quarter was affected by
certain non-recurring matters including a net $4.5 million benefit resulting from the reversal of
the remaining valuation allowances that had been held against our NOL carry forwards in the United
States; and a non-operating loss of $577 thousand resulting from decrease in the fair value of the
put option that was issued to the two former stockholders of E-Z Data who received shares of Ebix
common stock as part of the acquisition consideration paid by the Company in October 2009.
Channel Revenues: The Exchange channel grew 41.6% year over year to $32.2 million or 76.2% of the
Q2 revenues. The BPO channel decreased 5.8% year over year, to $3.75 million or 8.9% of the Q2
revenues. The Broker Channel grew 45.4% year over year, to $4.82 million or 11.4% of the Q2
revenues. The Carrier channel decreased 31.9% year over year, to $1.5 million or 3.5% of the Q2
revenues.
Share Repurchases: During Q2 2011, the Company repurchased 1.2 million shares of our common stock
at an average price of $19.80 per share for an aggregate amount of $23.8 million. Subsequent to
June 30, 2011, the Company has purchased another 1.1 million shares of its common stock at an
average price of $19.00 for an aggregate amount of $20.1 million. Year to date, the Company has
repurchased 2.37 million shares of Ebix common stock in 2011, for an aggregate consideration in the
amount of $46.3 million, representing an average price of $19.56 per share.
Q3 and Q4 Diluted Share Count: Taking into account the share repurchases made by the Company till
date, the Company expects the diluted share count for Q3 2011 to be 40.74 million, and for Q4 to be
40.59 million which would be 4.1% lower than the Q2 diluted share count used for EPS calculation.
This diluted share count is likely to be even lower if the Company continues to repurchase its
common stock from the market.
Controls: The Company also announced that it has engaged the services of Ernst & Young to augment
the Companys management and execution of our worldwide SOX compliance work regarding internal
controls. The engagement deliverables include redesign of testing plans, testing of all controls
related to Finance, HR, IT, Transfer Pricing, Income taxes and other operations; identification,
analysis and reporting of any control deficiencies; remediation and retesting of controls if any
deficiencies are identified. The engagement involves assisting in compliance with Section 404 of
the Sarbanes-Oxley Act of 2002, across United States, Singapore, Australia and India. The Company
believes that this endeavor will further strengthen Ebixs control structure and internal processes
over financial reporting and disclosures.
We are pleased with our operating cash flows for the quarter as they are in line with our
expectations. Ebix Chairman, President & CEO Robin Raina said, We are satisfied with our results
for the quarter especially since they include the effect of continued hirings being made by us to
strengthen our sales efforts. As we scale up these hirings and deploy some of our newer exchanges
fully, we expect our Exchange revenue streams to accordingly start generating higher levels of
revenue, and margins for the business.
Robin added, We remain focused on generating shareholder value. Towards that, we intend to pursue
three key initiatives growing the business organically, making accretive acquisitions, and
utilizing our substantial operating cash flows to buyback our common stock from the open market. We
believe that we can do all three, resulting in an ever improving business from an income and EPS
perspective for our shareholders.
Ebix SVP and CFO Robert Kerris said, We are pleased to report $19.6 million of operating cash
flows in the second quarter of 2011. Our current ratio improved to 1.61 at June 30, 2011 and our
working capital position is $25.2 million an improvement of $3.5 million from year-end 2010. The
improvement in our short-term liquidity position is the result of stronger operating cash flows,
the refinancing of our revolving credit facility that is now set to mature in April 2014 and better
collections on outstanding trade accounts receivable.
Investor Conference Call
Ebix will host a conference call to discuss its second quarter 2011 results at 11:00 a.m. Eastern
Standard Time today. A live audio webcast of the conference call, together with detailed financial
information, can be accessed through the companys Investor Relations home page at
http://www.ebix.com. In addition, an archive of the webcast can be accessed through
www.ebix.com/webcast. Participants who choose to call in to the conference call can do so
by dialing 1-(973) 409-9690. A replay of the audio and text of the investor call will be available
through the companys Investor Relations home page at http://www.ebix.com
About Ebix, Inc.
A leading international supplier of On-Demand software and E-commerce services to the insurance
industry, Ebix, Inc., (NASDAQ: EBIX) provides end-to-end solutions ranging from infrastructure
exchanges, carrier systems, agency systems and BPO services to custom software development for all
entities involved in the insurance industry.
With 30+ offices across Brazil, Singapore, Australia, the US, New Zealand, India and Canada, Ebix
powers multiple exchanges across the world in the field of life, annuity, health and property &
casualty insurance while conducting in excess of $100 billion in insurance premiums on its
platforms. Through its various SaaS-based software platforms, Ebix employs hundreds of insurance
and technology professionals to provide products, support and consultancy to thousands of customers
on six continents. Ebixs focus on quality has enabled it to be awarded Level 5 status of the
Carnegie Mellon Software Engineering Institutes Capability Maturity Model (CMM). With a recent ISO
27001-security certification, the Company also has a ISO 9001:2000 certification for both its
development and BPO units in India. For more information, visit the Companys website at
www.ebix.com
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CONTACT:
Aaron Tikkoo, IR
678 -281-2027 or atikkoo@ebix.com
678 -281-2027 or atikkoo@ebix.com
Safe Harbor for Forward Looking Statements under the Private Securities Litigation Reform Act
of 1995 This press release contains various forward looking statements and information that
are based on managements beliefs, as well as assumptions made by, and information currently
available to management, including statements regarding future economic performance and financial
condition, liquidity and capital resources, acceptance of the Companys products by the market and
managements plans and objectives. The Company has tried to identify such forward looking
statements by use of words such as expects, intends, anticipates, plans, believes,
will, should, and similar expressions, but these words are not the exclusive means of
identifying such statements. Such statements are subject to various risks, uncertainties and other
factors which could cause actual results to vary materially from those expressed in, or implied by,
the forward looking statements. Such risks, uncertainties and other factors include the extent to
which the Companys new products and services can be successfully developed and marketed, the
integration and other risks associated with recent and future acquisitions, the willingness of
independent insurance agencies to outsource their computer and other processing needs to third
parties, the Companys ability to continue to develop new products to effectively address market
needs in an industry characterized by rapid technological change, the Companys dependence on the
insurance industry (and in particular independent agents), the highly competitive and rapidly
changing automation systems market, the Companys ability to effectively protect its applications
software and other proprietary information, the Companys ability to attract and retain quality
management, and software, technical sales and other personnel, the potential negative impact on the
Companys outsourcing business in India from adverse publicity and possible governmental
regulation, the risks of disruption of the Companys Internet connections or internal service
problems, the possibly adverse effects of a substantial increase in volume of traffic on the
Companys website, mainframe and other servers, possible security breaches on the Companys website
and the possible effects of insurance regulation on the Companys business. Certain of these, as
well as other, risks, uncertainties and other factors, are described in more detail in Ebixs
periodic filings with the Securities and Exchange Commission, including the companys annual report
on form 10-K for the year ended December 31, 2010, included under Item 1A. BusinessRisk Factors.
Except as expressly required by the federal securities laws, the Company undertakes no obligation
to update any such factors or to publicly update any of the forward looking statements contained
herein to reflect future events or developments or changed circumstances or for any other reason.
# # #
(Financial tables follow)
3
Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating revenue |
$ | 42,267 | $ | 32,207 | $ | 82,317 | $ | 63,810 | ||||||||
Operating expenses: |
||||||||||||||||
Cost of services provided |
8,914 | 7,427 | 16,221 | 14,490 | ||||||||||||
Product development |
4,802 | 3,571 | 9,421 | 6,934 | ||||||||||||
Sales and marketing |
3,261 | 1,748 | 6,113 | 3,074 | ||||||||||||
General and administrative |
4,694 | 5,005 | 12,455 | 10,665 | ||||||||||||
Amortization and depreciation |
1,991 | 1,448 | 3,868 | 2,880 | ||||||||||||
Total operating expenses |
23,662 | 19,199 | 48,078 | 38,043 | ||||||||||||
Operating income |
18,605 | 13,008 | 34,239 | 25,767 | ||||||||||||
Interest income |
129 | 127 | 329 | 215 | ||||||||||||
Interest expense |
(159 | ) | (246 | ) | (374 | ) | (514 | ) | ||||||||
Other non-operating income (losses) |
(464 | ) | 1,444 | (818 | ) | 1,761 | ||||||||||
Foreign currency exchange gain |
1,397 | 233 | 2,865 | 336 | ||||||||||||
Income before income taxes |
19,508 | 14,566 | 36,241 | 27,565 | ||||||||||||
Income tax benefit (expense) |
2,840 | (556 | ) | 1,271 | (1,171 | ) | ||||||||||
Net income |
$ | 22,348 | $ | 14,010 | $ | 37,512 | $ | 26,394 | ||||||||
Basic earnings per common share |
$ | 0.57 | $ | 0.40 | $ | 0.97 | $ | 0.76 | ||||||||
Diluted earnings per common share |
$ | 0.53 | $ | 0.36 | $ | 0.90 | $ | 0.67 | ||||||||
Basic weighted average shares outstanding |
39,159 | 34,958 | 38,658 | 34,853 | ||||||||||||
Diluted weighted average shares outstanding |
42,344 | 39,275 | 41,882 | 39,305 |
4
Ebix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 23,627 | $ | 23,397 | ||||
Short-term investments |
1,780 | 6,300 | ||||||
Trade accounts receivable, less allowances of $1,766 as of June 30,
2011 and $1,126 as of December 31, 2010 |
32,829 | 26,028 | ||||||
Deferred tax asset, net |
3,174 | | ||||||
Other current assets |
5,305 | 5,057 | ||||||
Total current assets |
66,715 | 60,782 | ||||||
Property and equipment, net |
9,171 | 7,806 | ||||||
Goodwill |
245,749 | 180,602 | ||||||
Intangibles, net |
40,187 | 22,574 | ||||||
Indefinite-lived intangibles |
31,278 | 30,552 | ||||||
Deferred tax asset, net |
7,110 | | ||||||
Other assets |
1,084 | 984 | ||||||
Total assets |
$ | 401,294 | $ | 303,300 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 13,076 | $ | 15,344 | ||||
Accrued payroll and related benefits |
4,907 | 4,536 | ||||||
Short term debt |
6,664 | 5,000 | ||||||
Convertible debt, net of discount of $0 as of June 30, 2011 and $56 as
of December 31, 2010 |
| 4,944 | ||||||
Current portion of long term debt and capital lease obligations |
186 | 426 | ||||||
Deferred revenue |
14,780 | 8,610 | ||||||
Current deferred rent |
235 | 207 | ||||||
Put option liability |
1,462 | | ||||||
Other current liabilities |
184 | 18 | ||||||
Total current liabilities |
41,494 | 39,085 | ||||||
Revolving line of credit |
8,750 | 25,000 | ||||||
Long term debt and capital lease obligations, less current portion |
11,860 | 205 | ||||||
Other liabilities |
3,654 | 2,991 | ||||||
Deferred tax liability, net |
| 3,534 | ||||||
Put option liability |
| 537 | ||||||
Deferred revenue |
139 | 126 | ||||||
Long term deferred rent |
1,080 | 554 | ||||||
Total liabilities |
66,977 | 72,032 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares
issued and outstanding at June 30, 2011 and December 31, 2010 |
| | ||||||
Common stock, $0.10 par value, 60,000,000 shares authorized, 38,525,004
issued and 38,484,495 outstanding at June 30, 2011 and 36,057,791
issued and 36,017,282 outstanding at December 31, 2010 |
3,843 | 3,602 | ||||||
Additional paid-in capital |
213,635 | 153,221 | ||||||
Treasury stock (40,509 shares as of June 30, 2011 and December 31, 2010) |
(76 | ) | (76 | ) | ||||
Retained earnings |
105,154 | 67,642 | ||||||
Accumulated other comprehensive income |
11,761 | 6,879 | ||||||
Total stockholders equity |
334,317 | 231,268 | ||||||
Total liabilities and stockholders equity |
$ | 401,294 | $ | 303,300 | ||||
5
Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended | |||||||||
June 30, | |||||||||
2011 | 2010 | ||||||||
Cash flows from operating activities: |
|||||||||
Net income |
$ | 37,512 | $ | 26,394 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||
Depreciation and amortization |
3,868 | 2,880 | |||||||
Share based compensation |
1,143 | 905 | |||||||
Provision for doubtful accounts |
337 | 203 | |||||||
Provision (benefit) for deferred taxes |
(2,827 | ) | (369 | ) | |||||
Debt discount amortization on convertible debt |
21 | 211 | |||||||
Unrealized foreign exchange gain/(loss) on forward contracts |
(238 | ) | (49 | ) | |||||
Unrealized foreign exchange (gain), loss |
(1,769 | ) | (530 | ) | |||||
(Gain) loss on put option |
925 | (1,499 | ) | ||||||
Reduction of acquisition earnout accruals |
(1,868 | ) | | ||||||
Changes in assets and liabilities, net of effects from acquisitions: |
|||||||||
Accounts receivable |
(3,693 | ) | (1,795 | ) | |||||
Other assets |
825 | 387 | |||||||
Accounts payable and accrued expenses |
(3,482 | ) | (1,926 | ) | |||||
Accrued payroll and related benefits |
(850 | ) | (709 | ) | |||||
Deferred revenue |
(781 | ) | (303 | ) | |||||
Deferred rent |
(120 | ) | (31 | ) | |||||
Other current liabilities |
867 | 33 | |||||||
Net cash provided by operating activities |
29,870 | 23,802 | |||||||
Cash flows from investing activities: |
|||||||||
Acquisition of ADAM, net of cash acquired |
3,529 | | |||||||
Investment in MCN, net of cash acquired |
(381 | ) | (2,931 | ) | |||||
Acquisition of Trades Monitor, net of cash acquired |
| (2,749 | ) | ||||||
Acquisition of Connective Technologies, net of cash acquired |
| (1,337 | ) | ||||||
Investment in ConfirmNet |
(184 | ) | (2,975 | ) | |||||
Purchases of marketable securities |
(3,080 | ) | (5,701 | ) | |||||
Maturities of marketable securities |
7,600 | | |||||||
Capital expenditures |
(1,335 | ) | (899 | ) | |||||
Net cash provided by/(used in) investing activities |
6,149 | (16,592 | ) | ||||||
Cash flows from financing activities: |
|||||||||
Repayments on revolving line of credit, (net of proceeds) |
(16,250 | ) | (7,500 | ) | |||||
Proceeds from term loan |
16,250 | 10,000 | |||||||
Principal payments of term loan obligation |
(3,074 | ) | (2,344 | ) | |||||
Repurchases of common stock |
(26,198 | ) | (4,999 | ) | |||||
Settlement on conversion of convertible debt |
(6,761 | ) | | ||||||
Proceeds from the exercise of stock options |
14 | 178 | |||||||
Payments of capital lease obligations |
(186 | ) | (552 | ) | |||||
Net cash used in financing activities |
(36,205 | ) | (5,217 | ) | |||||
Effect of foreign exchange rates on cash |
416 | (329 | ) | ||||||
Net change in cash and cash equivalents |
230 | 1,664 | |||||||
Cash and cash equivalents at the beginning of the period |
23,397 | 19,227 | |||||||
Cash and cash equivalents at the end of the period |
$ | 23,627 | $ | 20,891 | |||||
Supplemental disclosures of cash flow information: |
|||||||||
Interest paid |
$ | 361 | $ | 276 | |||||
Income taxes paid |
$ | 1,505 | $ | 1,275 |
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