Ebix Records 51% YOY Growth with Diluted EPS of 36 Cents


  • Revenue of $32.2 Million, up 44% Year-Over-Year
  • Net Income of $14.0 Million, up 56% Year-Over-Year
  • Operating cash flow for Q2 2010 of $16.0 million, up 108% Year-Over-Year

ATLANTA, GA – August 9, 2010 – 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 2010. The results marked the highest revenue, net income, operating cash flow and diluted EPS that the company has reported in any one-quarter, in its thirty-four year history.

Ebix delivered the following results for its second quarter, fiscal year 2010:

Revenues: Total Q2 2010 revenue was $32.2 million, an increase of 44% on a year-over-year basis, as compared to Q2 2009 revenue of $22.4 million. During the six months ended June 30, 2010 revenue increased $20.7 million or 48%, to $63.8 million compared to $43.1 million during the same period in 2009.

Channel Revenues: The Exchange channel grew 73% year over year to $22.7 million or 71% of the Q2 revenues. The BPO channel grew 7% year over year, to $4.0 million or 12% of the Q2 revenues. The Broker Channel grew 17% year over year, to $3.3 million or 10% of the Q2 revenues. The Carrier channel dropped 20% year over year, to $2.2 million or 7% of the Q2 revenues.

Customers: The Company also announced the signing of new contracts with named accounts like Hygeia HMO, Marsh, Guardian Life, Liberty Life, SunLife Assurance, Pacific Life, Great West Casualty Co., Penn Mutual, Fidelity Investments, National Financial Services, American Life, M&T Bank, American Equity, Ed Jones, TransWestern, Chartis Brazil, Ace Life Brazil, MetLife - Brazil, Mexico & US, Western General, Symmetra, Forethought, Fishrock, New Jersey Insurance Underwriting Association, North Florida Agents Network, AON – Switzerland, Malaysia & Australia, Lockton Asia, Willis – India & Netherlands, HSBC-Marsh, Brokerweb - NZ, Kaiser Permanente, Primex, Bartech Group, Singer Nelson, National Farmers, Willis of Maryland, Willis of Seattle, Kroger and Target etc. This list of names is a sample representation of contracts signed by the Company in the second quarter of 2010.

Net Income: Q2 2010 net income was $14.0 million, an increase of 56% on a year-over-year basis, as compared to Q2 2009 net income of $9.0 million. This included non-operating income of $1.4 million resulting from the gain recognized in regards to the 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.

Earnings per Share: Q2 2010 diluted earnings per share rose 50% year-over-year to $0.36, as compared to $0.24 in the second quarter of 2009. For purposes of the Q2 2010 EPS calculation, there was an average of 39.3 million diluted shares outstanding during the quarter, as compared to 37.5 million diluted shares outstanding in Q2 of 2009.

Expenses: The Company’s operating expenses for the quarter grew by 46 percent to $19.2 million as compared to $13.2 million for the second quarter of 2009.

Margins: The Q2 2010 operating margins at 40% were consistent with our margins in Q2 of 2009.

Cash Flows: Net cash provided by the Company’s ongoing operations in Q2 2010 was $16.0 million, an increase of 108% year-over-year, compared to $7.7 million in Q2 of 2009. During the six months ended June 30, 2010 the Company generated $23.8 million of net cash flow from operating activities, as compared to $15.5 million in the first six months of 2009.

“The insurance industry is still reeling from the aftereffects of the economic crisis in the United States. With consumer confidence being rather low, Annuity production industry wide is down 20% year over year. The property and casualty sector has had one of the worst years in a decade. The health insurance industry is still dealing with the uncertainties created by the Health reform bill passage.” Ebix Chairman, President & CEO Robin Raina said, “In spite of all of that, Ebix has continued to move forward with record revenues, earnings, cash flows and net income. We have continued to substitute production drops in the industry through organic growth means by bringing new clients to our Exchanges. We have always believed that a company’s true strength is tested when times are bad for the industry. A company that can produce record results in an economy like this has a much better chance of producing spectacular results as times become better for the industry as a whole.”

Robin added, “We believe that our end-to-end Exchange solutions provide us a strategic business and technology advantage over our competition. We are presently in the process of hiring fifteen new sales people for our Exchange and CRM initiatives. These additional resources should enable us to organically grow our revenues more dramatically over the coming months and years.”

“In recent times, I have often been asked about the possibility of a dividend being issued by the Company. Clearly, our intent is to try and secure the best possible returns from the use of our operating cash flows. We believe that our cash can generate much higher returns for our shareholders, by investing in both new accretive acquisitions and organic growth initiatives than through issuing dividends to our shareholders.” Robin said, “While the Company does not completely rule out the possibility of issuing dividends in the future, at present we are more inclined to use our cash to generate further improvement in future earnings.”

Ebix SVP & CFO Robert Kerris said, “We are pleased to report $16 million of operating cash flows in the second quarter of 2010 and sustained 40% operating margins. Our current ratio improved to 1.13 at June 30, 2010 as compared to 0.62 at December 31, 2009 and our working capital position improved to $6.1 million from a deficit of $28.6 million that existed at the end of the 2009. 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 February 2012, and better collections on outstanding trade accounts receivable.”


Investor Conference Call
Ebix will host a conference call to discuss its second quarter 2010 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 company's 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 company's 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. Ebix’s focus on quality has enabled it to be awarded Level 5 status of the Carnegie Mellon Software Engineering Institute’s Capability Maturity Model (CMM). Ebix has also earned ISO 9001:2000 certification for both its development and BPO units in India. For more information, visit the Company’s website at www.ebix.com

CONTACT:
Aaron
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 management's 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 Company's products by the market and management's 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 Company's 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 Company's ability to continue to develop new products to effectively address market needs in an industry characterized by rapid technological change, the Company's dependence on the insurance industry (and in particular independent agents), the highly competitive and rapidly changing automation systems market, the Company's ability to effectively protect its applications software and other proprietary information, the Company's ability to attract and retain quality management, and software, technical sales and other personnel, the potential negative impact on the Company's outsourcing business in India from adverse publicity and possible governmental regulation, the risks of disruption of the Company's Internet connections or internal service problems, the possibly adverse effects of a substantial increase in volume of traffic on the Company's website, mainframe and other servers, possible security breaches on the Company's website and the possible effects of insurance regulation on the Company's business. Certain of these, as well as other, risks, uncertainties and other factors, are described in more detail in Ebix’s periodic filings with the Securities and Exchange Commission, including the company’s annual report on form 10-K for the year ended December 31, 2009, included under "Item 1A. Business—Risk 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.

Ebix, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

    Three Months Ended June 30,   Six Months Ended June 30,
      2010       2009       2010       2009  
Operating revenue     $ 32,207       $ 22,421       $ 63,810       $ 43,089  
Operating expenses:                
Cost of services provided     7,427       4,532       14,490       8,833  
Product development     3,571       2,753       6,934       5,258  
Sales and marketing     1,748       1,121       3,074       2,255  
General and administrative     5,005       3,925       10,665       7,553  
Amortization and depreciation     1,448       830       2,880       1,573  
Total operating expenses     19,199       13,161       38,043       25,472  
Operating income     13,008       9,260       25,767       17,617  
Interest income     127       39       215       91  
Interest expense     (246)       (273)       (514)       (557)  
Other non-operating income     1,444       —       1,761       —  
Foreign exchange gain     233       346       336       752  
Income before income taxes     14,566       9,372       27,565       17,903  
Income tax expense     (556)       (416)       (1,171)       (612)  
Net income     $ 14,010       $ 8,956       $ 26,394       $ 17,291  
Basic earnings per common share     $ 0.40       $ 0.29       $ 0.76       $ 0.57  
Diluted earnings per common share     $ 0.36       $ 0.24       $ 0.67       $ 0.47  
Basic weighted average shares outstanding     34,957       30,558       34,853       30,171  
Diluted weighted average shares outstanding     39,275       37,461       39,305       37,281  

Ebix, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

   
June 30, 2010
 
December 31, 2009
      (Unaudited)      
ASSETS        
Current assets:        
Cash and cash equivalents     $ 20,891       $ 19,227  
Short-term investments     7,500       1,799  
Trade accounts receivable, less allowances of $646 and $565, respectively     24,402       22,861  
Other current assets     2,123       2,628  
Total current assets     54,916       46,515  
Property and equipment, net     7,705       7,865  
Goodwill     164,993       157,245  
Intangibles, net     21,019       20,505  
Indefinite-lived intangibles     29,299       29,223  
Other assets     953       814  
Total assets     $ 278,885       $ 262,167  
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable and accrued liabilities     $ 8,417       $ 11,060  
Accrued payroll and related benefits     2,930       3,634  
Short term debt     4,375       23,100  
Convertible debt, net of discount of $494 and $706, respectively     24,505       28,681  
Current portion of long term debt and capital lease obligations     463       596  
Deferred revenue     7,776       7,754  
Current deferred rent     191       163  
Other current liabilities     110       109  
Total current liabilities     48,767       75,097  
Revolving line of credit     15,600       —  
Long term debt and capital lease obligations, less current portion     3,587       671  
Other liabilities     2,966       2,965  
Deferred tax liability, net     5,195       5,147  
Put option liability     5,097       6,596  
Deferred revenue     123       269  
Long term deferred rent     648       679  
Total liabilities     81,983       91,424  
Stockholders’ equity:        
Preferred stock, $.10 par value,
500,000 shares authorized,
no shares issued and
outstanding at June 30, 2010 and December 31, 2009 		    —       —  
Common stock, $.10 par value,
60,000,000 shares authorized,
34,827,986 issued and
34,787,477 outstanding at June 30, 2010 and
34,474,608 issued and
34,434,099 outstanding at December 31, 2009 		    3,479       3,443  
Additional paid-in capital     158,899       158,404  
Treasury stock
(40,509 shares as of June 30, 2010 and December 31, 2009) 		    (76)       (76)  
Retained earnings     35,017       8,623  
Accumulated other comprehensive income (loss)     (417)       349  
Total stockholders’ equity     196,902       170,743  
Total liabilities and stockholders’ equity     $ 278,885       $ 262,167  

Ebix, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

    Six months Ended June 30,
      2010       2009  
Cash flows from operating activities:        
Net income     $ 26,394       $ 17,291  
Adjustments to reconcile net income
to net cash provided by operating activities: 		       
Depreciation and amortization     2,880       1,573  
Stock-based compensation     217       100  
Restricted stock compensation     688       513  
Provision for doubtful accounts     203       90  
Debt discount amortization on convertible debt     211       —  
Unrealized foreign exchange (gain)loss on forward contracts     (49)       (144)  
Unrealized foreign exchange (gain)loss     (530)       —  
Gain on put option     (1,499)       —  
Changes in assets and liabilities,
net of effects from acquisitions: 		       
Accounts receivable     (1,795)       (2,617)  
Other assets     387       (387)  
Accounts payable and accrued expenses     (1,926)       (483)  
Accrued payroll and related benefits     (709)       (532)  
Deferred revenue     (303       1,092  
Deferred rent     (31)       —  
Deferred taxes     (369)       (1,125)  
Other current liabilities     33       178  
Net cash provided by operating activities     23,802       15,549  
Cash flows from investing activities:        
Acquisition of MCN, net of cash acquired     (2,931)       —  
Acquisition of Trade Monitor, net of cash acquired     (2,749)       —  
Acquisition of Connective Technologies, net of cash acquired     (1,337)       —  
Investment in ConfirmNet     (2,975)       (3,094)  
Investment in IDS     —       (1,000)  
Investment in Acclamation, net of cash acquired     —       (85)  
Investment in Facts, net of cash acquired     —       (5,704)  
Investment in Periculum, net of cash acquired     —       (200)  
(Purchases)maturities of marketable securities, net     (5,701)       (1,618)  
Capital expenditures     (899)       (1,200)  
Net cash used in investing activities     (16,592)       (12,901)  
Cash flows from financing activities:        
Repayments on line of credit, (net)     (7,500)       —  
Proceeds from term loan     10,000       —  
Principal payments of term loan obligation     (2,344)       —  
Repurchases of common stock     (4,999)       (505)  
Proceeds from the exercise of stock options     178       1,422  
Payments of capital lease obligations     (552)       (78)  
Principal payments of debt obligations     —       (742)  
Net cash provided by/(used in) financing activities     (5,217)       97  
Effect of foreign exchange rates on cash     (329)       (344)  
Net change in cash and cash equivalents     1,664       2,401  
Cash and cash equivalents at the beginning of the period     19,227       9,475  
Cash and cash equivalents at the end of the period     $ 20,891       $ 11,876  
Supplemental disclosures of cash flow information:        
Interest paid     $ 276       $ 429  
Income taxes paid     $ 1,275       $ 2,873