Ebix Q1 Revenue Rose 27% to a Record $40.1M, Net Income Increased 24% to $15.2M and EPS Rose 16% to $0.37


ATLANTA--(BUSINESS WIRE)-- 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 first quarter of 2011 and will host a conference call at 11:00 a.m. EDT (details below).

Ebix delivered the following results for its first quarter of fiscal year 2011:

Revenue: Total Q1 2011 revenue grew to a record $40.1 million, an increase of 27% on a year-over-year basis, as compared to Q1 2010 revenue of $31.6 million. The Q1 2011 results include financial results from the ADAM acquisition, as of 7th February 2011.

Expenses: Ebix’s operating expenses for the quarter grew by 30 percent to $24.4 million as compared to $18.8 million for the first quarter of 2010. The Q1 2011 expenses include a one-time non-recurring charge of $1.79 million associated with the payment of investment banking fees of $1.39 million and severance costs of $0.4 million, related to the A.D.A.M. acquisition.

Margins: Reflecting the one-time acquisition related expenses in the quarter, Ebix reported an operating margin of 39% for the three months ending March 31, 2011 as compared to 40% for the same period during 2010.

Net Income: Q1 2011 net income rose 22% to $15.2 million, as compared to Q1 2010 net income of $12.4 million. The Q1 2011 net income number includes a non-operating charge of $354 thousand resulting from the increase 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.

Earnings per Share: Q1 2011 diluted earnings per share rose 16% to $0.37, as compared to $0.32 in Q1 2010. For purposes of the Q1 2011 EPS calculation, there was an average of 41.5 million diluted shares outstanding in Q1 2011, as compared to 39.3 million diluted shares outstanding in Q1 of 2010.

Channel Revenues: The Exchange channel grew 36% year over year to $31.1 million or 78% of the Q1 revenues. The BPO channel grew 4% year over year, to $3.6 million or 9% of the Q1 revenues. The Broker Channel grew 32% year over year, to $3.8 million or 10% of the Q1 revenues. The Carrier channel dropped 35% year over year, to $1.5 million or 3% of the Q1 revenues.

Customers: Ebix also announced the signing of new contracts with named accounts like State of Ontario, NFU, QBE Holdings, MetLife, BanCorp Investment Services, AllState, Prudential, Penn Mutual, Guardian Life, Lincoln National, Fireman’s Fund, Hartford, Capital Rock, HSBC, Great American Insurance, Catholic Health Initiatives, CBIZ, American Collectors Insurance Company, Assurant, United Airlines, Hines, Dollar General, Schneider Electric, BNSF Railway, Kroger, Betchel Jacobs, Signature Homes, City of Phoenix, and CB Richard Ellis. This list of names is a sample representation of contracts signed by the Company in the first quarter of 2011.

Cash Flows: Ebix generated $10.3 million of net cash flow from ongoing operations in Q1 2011, as compared to $7.8 million in Q1 2010. Ebix’s Q1 2011 net cash flow from operations of $10.3 million was impacted by the early payment of an April payroll amounting to approximately $1.6 million, $1.39 million associated with the payment of investment banking fees for A.D.A.M. acquisition, and approximately $0.7 million payments made by the Company after the closing for A.D.A.M.’s pre-acquisition period expenses.

Convertible Debt: The Company announced that the only convertible debt remaining as of 31st March 2011 was for $5 million. Subsequent to the close of Q1 2011, Ebix retired this remaining $5 million in convertible debt for total consideration of $6.8 million. The payment represents the convertible’s principal amount and a conversion gain of $1.8 million related to the appreciation of Ebix’s common stock. Ebix elected to redeem the convertible debt using cash rather than common stock.

Share Repurchases: During Q1 2011, the Company repurchased 106,483 shares of our common stock at an average price of $22.49 per share for an aggregate amount of $2.4 million. Year to date, the Company has repurchased 377,573 shares of Ebix common stock in 2011, for an aggregate consideration in the amount of $8.5 million, representing an average price of $22.50 per share.

Robin Raina, Ebix Chairman, President & CEO said, “Ebix turned in a strong Q1 2011 performance. Operating margins and cash flow from operations remained strong despite the impact of one-time acquisition, integration and other A.D.A.M. – related costs. The highlight of the Q1 2011 results for us is the fact our operating margins would have been 43% when excluding the non-recurring expenses directly associated with the ADAM acquisition (specifically $1.39 million investment banking fee and $0.4 million of employee severance costs).”

Mr. Raina added, “We are very pleased with the progress of the A.D.A.M. integration so far. We anticipate positive revenue and profit contributions from A.D.A.M. in future periods as we work to leverage their customer reach, health information, and e-Learning expertise to create pioneering health content and e-commerce exchanges in the United States and abroad. The integration has proven to be particularly streamlined given A.D.A.M. was also based in Atlanta.”

Ebix SVP & CFO Robert Kerris said, “Ebix continued to produce sustainable and attractive cash flow from our ongoing operations during Q1 2011. With $39.3 million of bank deposits ($35.6 million of cash and $3.7 million of fixed deposits for 90 days or more) as of March 31, 2011, $26.3 million of additional borrowing capacity as of April 19, 2011, and the continued growth in operating cash flows, Ebix is well positioned to use this cash towards supporting continued organic growth, develop cutting edge products and services, and making strategic accretive acquisitions in the Exchange arena.”

Mr. Kerris added, “As of March 31, 2011, the Company had remaining available domestic NOL carry-forwards of $68.5 million which are available to negate cash outflows that will otherwise have been expected in connection with future federal and certain tax payments associated with future taxable income. Our Q1 results reflect a worldwide effective tax rate of 9.4% versus 4.7% in Q1 of 2010 reflecting a relatively greater mix of income in higher tax rate jurisdictions in Q1 of 2011, as compared to the same quarter in 2010.”

Investor Conference Call, Today, Tuesday, May 10th at 11:00 a.m. EDT:

Dial-in Number: +1-973-409-9690
Webcast URL: www.ebix.com/webcast
Archived Webcast and Transcript: http://www.ebix.com/invhome.aspx

About Ebix, Inc.
A leading international supplier of On-Demand software and E-commerce services to the insurance industry, Ebix, Inc., (NASDAQ:EBIX - News) 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 a www.ebix.com

CONTACT:
Aaron
678-281-2027 or atikkoo@ebix.com

(Financial tables follow)

Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
        Three Months Ended
        March 31,
        2011   2010
Operating revenue       $ 40,050     $ 31,603  
Operating expenses:            
Cost of services provided       7,307     7,063  
Product development       4,619     3,363  
Sales and marketing       2,852     1,326  
General and administrative       7,761     5,659  
Amortization and depreciation       1,877     1,433  
Total operating expenses       24,416     18,844  
Operating income       15,634     12,759  
Interest income       200     88  
Interest expense       (215)     (268)  
Other non-operating income       (354)     317  
Foreign currency exchange gain       1,468     103  
Income before income taxes       16,733     12,999  
Income tax expense       (1,569)     (615)  
Net income       $ 15,164     $ 12,384  
Basic earnings per common share       $ 0.40     $ 0.36  
Diluted earnings per common share       $ 0.37     $ 0.32  
Basic weighted average shares outstanding       38,151     34,747  
Diluted weighted average shares outstanding       41,517     39,335  

Ebix, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
      March 31,   December 31,
      2011   2010
ASSETS     (Unaudited)   (Audited)
Current assets:          
Cash and cash equivalents     $ 35,589     $ 23,397  
Short-term investments     3,724     6,300  
Trade accounts receivable,
less allowances of $1,083 and $1,126, respectively 		    35,173     26,028  
Other current assets     6,593     5,057  
Total current assets     81,079     60,782  
Property and equipment, net     9,287     7,806  
Goodwill     249,358     180,602  
Intangibles, net     41,109     22,574  
Indefinite-lived intangibles     30,924     30,552  
Other assets     1,104     984  
Total assets     $ 412,861     $ 303,300  
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued liabilities     $ 16,171     $ 15,344  
Accrued payroll and related benefits     4,212     4,536  
Short term debt     3,750     5,000  
Convertible debt, net of discount
of $35 and $56, respectively 		    4,965     4,944  
Current portion of long term debt and
capital lease obligations 		    232     426  
Deferred revenue     16,162     8,610  
Current deferred rent     221     207  
Other current liabilities     73     18  
Total current liabilities     45,786     39,085  
Revolving line of credit     25,000     25,000  
Long term debt and capital lease
obligations, less current portion 		    233     205  
Other liabilities     2,991     2,991  
Deferred tax liability, net     2,576     3,534  
Put option liability     891     537  
Deferred revenue     116     126  
Long term deferred rent     1,145     554  
Total liabilities     78,738     72,032  
Stockholders’ equity:          
Preferred stock, $0.10 par value,
500,000 shares authorized,
no shares issued and outstanding
at March 31, 2011 and 		         
December 31, 2010     —     —  
Common stock, $0.10 par value,
60,000,000 shares authorized,
39,668,672 issued and 39,628,
163 outstanding at 		         
March 31, 2011 and 36,057,791 issued
and 36,017,282 outstanding at December 31, 2010 		    3,961     3,602  
Additional paid-in capital     238,500     153,221  
Treasury stock (40,509 shares as of
March 31, 2011 and December 31, 2010) 		    (76)     (76)  
Retained earnings     82,806     67,642  
Accumulated other comprehensive income     8,932     6,879  
Total stockholders’ equity     334,123     231,268  
Total liabilities and stockholders’ equity     $ 412,861     $ 303,300  

Ebix, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(In thousands)
      Three Months Ended
 
    March 31,
      2011       2010
Cash flows from operating activities:              
Net income     $ 15,164         $ 12,384  
Adjustments to reconcile net income
to net cash provided by operating activities: 		             
Depreciation and amortization     1,877         1,432  
Share based compensation     556         425  
Provision for doubtful accounts     11         —  
Provision for deferred taxes     2,198         (495)  
Debt discount amortization on convertible debt     21         105  
Unrealized foreign exchange
gain/(loss) on forward contracts 		    (152)         (849)  
Unrealized foreign exchange gain     (1,890)         568  
Gain on sale of building     —         (262)  
(Gain) loss on put option     354         (55)  
Changes in assets and liabilities,
net of effects from acquisitions: 		             
Accounts receivable     (5,987)         (2,457)  
Other assets     1,278         (461)  
Accounts payable and accrued expenses     (2,357)         (3,632)  
Accrued payroll and related benefits     (1,463)         332  
Deferred revenue     689         705  
Deferred rent     (55)         23  
Other current liabilities     69         (1)  
Net cash provided by operating activities     10,313         7,762  
Cash flows from investing activities:              
Acquisition of ADAM, net of cash acquired     3,529         —  
Acquisition of MCN, net of cash acquired     —         (2,828)  
Investment in ConfirmNet     —         (2,975)  
Purchases of marketable securities, net     (5,384)         (933)  
Maturities of marketable securities, net     7,960         —  
Capital expenditures     (524         (343  
Net cash provided by/(used in)
investing activities 		    5,581         (7,079)  
Cash flows from financing activities:              
Repayments on revolving line of credit, (net of proceeds)     —         (7,500)  
Proceeds from term loan     —         10,000  
Principal payments of term loan obligation     (1,250)         (1,250)  
Repurchases of common stock     (2,395)         (1,002)  
Proceeds from the exercise of stock options     —         176  
Payments of capital lease obligations     (101)         (372 )  
Principal payments of debt obligations     (157)         —  
Net cash provided by/(used in) financing activities     (3,903)         52  
Effect of foreign exchange rates on cash     201         456  
Net change in cash and cash equivalents     12,192         1,191  
Cash and cash equivalents at the beginning of the period     23,397         19,227  
Cash and cash equivalents at the end of the period     $ 35,589         $ 20,418  
Supplemental disclosures of cash flow information:              
Interest paid     $ 204         $ 125  
Income taxes paid     $ 558         $ 999