Exela Technologies, Inc. Reports Preliminary Second Quarter 2023 Results

PreliminarySecond Quarter Highlights

• Revenue of $272.9 million, up 2.3% year-over-year (up 2.5% on a constant currency basis)
• Net loss of $30.9 million
• Gross profit(1) of $60.9 million, up 23.0% or $11.4 million year-over-year, with a corresponding margin of 22.3% and up 3.8% year-over-year and up 1.4% sequentially
• Adjusted EBITDA of $40.9 million, up 12.1% year-over-year, with a corresponding margin of 15.0% and up 17.8% sequentially
• $106.2 million in new TCV(2) wins and renewal of $32.8M TCV reflect strength of award-winning best-in-class solutions and services
• Long-term Liability(3) reduced to $792 million from $1.608 billion
• Value enhancing initiatives include Completion of Debt Recapitalization and XBP Europe progress
  

Conference call scheduled for August 14, 2023 at 8:30 AM ET

IRVING, Texas, Aug. 14, 2023 (GLOBE NEWSWIRE) -- Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA, XELAP), a global business process automation leader, announced today its financial results for the second quarter ended June 30, 2023.

“Our improving metrics in the second quarter are a result of many factors but certain ones stand above all - focus on cost management, debt reduction and the value proposition of our services and solutions enhanced by evolving AI,” said Par Chadha, Executive Chairman of Exela.

Second Quarter Highlights

• Revenue: Revenue for Q2 2023 was $272.9 million, up 2.3% compared to $266.8 million in Q2 2022.
  • Revenue for the Information and Transaction Processing Solutions segment was $185.0 million, a decrease of 2.6% year-over-year, primarily due to lower volumes, customers rebalancing portfolios and attrition.
  • Healthcare Solutions revenue was $63.6 million, an increase of 12.8% year-over-year, led by higher volumes from our new and existing customers.
  • Legal and Loss Prevention Services revenue was $24.3 million, an increase of 19.5% year-over-year due to higher demand for services.

Operating income/(loss): Operating income for Q2 2023 was $11.2 million, compared with operating loss of $20.9 million in Q2 2022. The $32.1 million year over year improvement was primarily driven by higher revenue, lower cost of revenue, lower Selling, General and Administrative Expenses including a gain from sale of an asset.

• Net Loss: Net loss for Q2 2023 was $30.9 million, compared with a net loss of $79.2 million in Q2 2022.
  • EBITDA(4): EBITDA for Q2 2023 was $31.6 million compared to a loss of $17.6 million in Q2 2022. EBITDA margin for Q2 2023 was 11.6% compared to (6.6)% in Q2 2022.
  • AdjustedEBITDA(5): Adjusted EBITDA for Q2 2023 was $40.9 million, an increase of 12.1% compared to $36.5 million in Q2 2022. Adjusted EBITDA margin for Q2 2023 was 15.0%, an increase of 130 basis points from 13.7% in Q2 2022.
    

Capital Expenditures: Capital expenditures for Q2 2023 were 1.4% of revenue compared to 2% of revenue in Q2 2022

Nasdaq Non-Compliance Notice

On August 11, 2023, Exela received a notice of non-compliance from Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, as a result of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (the “Form 10-Q”), the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Rule”), which requires listed companies to timely file all periodic financial reports with the U.S. Securities and Exchange Commission (the “SEC”). Under Nasdaq’s listing rules, the Company has 60 calendar days to submit a plan to regain compliance. If the plan is accepted by Nasdaq, the Company can be granted up to 180 calendar days from the Form 10-Q due date, or until or until February 5, 2024, to regain compliance. The Company expects to complete its Form 10-Q and intends to file the Form 10-Q as soon as practicable to regain compliance with the Rule within the time period to provide the plan of compliance.

Earnings Conference Call and Audio Webcast

Exela will host a conference call to discuss its second quarter 2023 financial results at 8:30 AM ET on August 14, 2023. To access this call, dial 833-255-2831 or +1-412-902-6724 (international). The password for the call is “Exela Earnings Call”.

Shortly after the conclusion of the call, a replay will be available through May 18, 2023 at 877-344-7529 or +1-412-317-0088 (international). The replay passcode is 20333000. A replay will also be archived on the Exela investor relations website at http://investors.exelatech.com.

Exela invites all investors to ask questions that they would like addressed on the conference call. We ask 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.

Below are the notes referenced above:
(1) Gross Profit is defined as revenue less cost of revenue excluding depreciation and amortization
(2) TCV: Total Contract Value, the aggregate $USD value of a contract over its life
(3) Long-term liability: Includes senior secured term loan and revolving facility, senior secured 2023 notes, senior secured 2026 notes, Securitization facility and interest-bearing current liabilities calculated ending July 2023 beginning June 2021
(4) EBITDA is a non-GAAP measure. A reconciliation of EBITDA is attached to this release.
(5) Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.

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. Utilizing foundational technologies spanning information management, workflow automation, and integrated communications, Exela’s software and services include multi-industry, departmental solution suites addressing finance and accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and the public sector. Through cloud-enabled platforms, built on a configurable stack of automation modules, and approximately 15,500 employees operating in 21 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner.

Find out more at www.exelatech.com
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Financial Disclosure Advisory
The preliminary unaudited financial results included in this press release are based on information available as of August 14, 2023 and management’s review of operations and financial results for the second quarter of 2023. Actual results may be materially different from these preliminary financial results. They remain subject to change based on the completion of customary review procedures and are forward-looking statements. The Company assumes no obligation to update these statements, except as may be required by law. The actual results may be materially different and are affected by the risk factors and uncertainties identified in this press release and in the Company's annual and quarterly filings with the SEC. An independent registered public accounting firm has not reviewed or performed any procedures with respect to the preliminary unaudited financial information included in this release. The Company expects to file a quarterly report on Form 10-Q with respect to the period ended June 30, 2023, once an independent registered public accounting firm has reviewed the relevant unaudited financial information.

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.

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 the network outage described in this press release and those discussed under the heading “Risk Factors” in our Annual Report and in subsequent filings with the U.S. Securities and Exchange Commission (“SEC”). 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.

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.

Investor and/or Media Contacts:
Vincent Kondaveeti
E: vincent.kondaveeti@exelatech.com

Mary Beth Benjamin
E: IR@exelatech.com

Source: Exela Technologies, Inc.