JOHNS CREEK, GA – August 7, 2015 – Ebix, Inc. (NASDAQ: EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance, financial and healthcare industries, today reported results for the fiscal second quarter ended June 30, 2015.
Ebix delivered the following results for the second quarter of 2015:
Revenues: Total Q2 2015 revenue was $64.7 million, an increase of 26% on a year-over-year basis, as compared to Q2 2014 revenue of $51.5 million and a slight 1.5% increase over Q1 2015 revenue of $63.8 million.
On a constant currency basis, Ebix Q2 2015 revenue increased 31% year over year to $67.4 million as compared to $51.5 million in Q2 of 2014. Also on a constant currency basis, year to date revenue increased 29% to $133.1 million as compared to $102.9 million during the same period in 2014.
Earnings per Share: Q2 2015 diluted earnings per share of $0.54 were up 54% as compared to $0.35 in the second quarter of 2014. For purposes of the Q2 2015 EPS calculation, there was an average of 35.3 million diluted shares outstanding during the quarter, as compared to 38.6 million diluted shares outstanding in Q2 2014.
Operating Cash: Cash generated from operations in Q2 2015 was $17.5 million, essentially at the same levels as compared to $17.8 million in Q2 2014 and significantly improved from the ($7.3) million of cash used in operation during Q1 of 2015.
Operating Income and Margins: Operating income for Q2 2015 was up 17% at $20.4 million as compared to $17.5 million of operating income in Q2 2014. Operating margins, for Q2 2015 for Consulting were at 24% while for the remaining businesses were at 33%
Net Income: Q2 2015 net income was $19.0 million, up 40% as compared to Q2 2014 net income of $13.6 million. During the six months ended June 30, 2015, net income increased $8.4 million or 29%, to $37.4 million compared to $29 million during the same period in 2014
Q3 2015 Diluted Share Count: As of today, the Company expects the diluted share count for Q3 2015 to be approximately 34.8 million.
Channel Revenues: The Exchange channel continued to be the largest channel for Ebix accounting for 72% of the Company's Q2 2015 revenues.
| (dollar amounts in thousands) | Three Months Ended June 30, |
Six Months Ended June 30, |
||
| Channel | 2015 | 2014 | 2015 | 2014 |
| Exchanges | $ 46,825 | $ 41,350 | $ 93,503 | $ 83,455 |
| Broker Systems | 3,519 | 4,865 | 7,255 | 9,351 |
| Risk Compliance Solutions (RCS) | 13,289 | 3,652 | 25,464 | 7,077 |
| Carrier Systems | 1,079 | 1,609 | 2,243 | 2,997 |
| Total Revenue | $ 64,712 | $ 51,476 | $ 128,465 | $ 102,880 |
The continued strengthening of the US dollar, year over year, as compared to the Australian dollar and the Brazilian real decreased revenue by $2.7 million in Q2 2015 and $4.6 million during the six months ended June 30, 2015 across the Exchange and Broker Systems Channels.
Share Repurchases: In August 2014, the company had announced its intent to purchase up to $80 million of Ebix shares over the next 12 months. As of July 31st the Company reported that it had purchased 4 million shares worth approximately $80 million since August 2014. The Company Board of Directors is likely to authorize a new $100 million share repurchase plan once the previous authorized amount of $100 million is fully utilized.
Ebix Chairman, President and CEO Robin Raina said, "On a constant currency basis, our revenues for Q2 2015 would have been $67.4 million as compared to $51.5 million in Q2 of 2015. We feel that we have momentum on our side now. With many prestigious signed contracts in implementation, a number of key new contracts signed in Q2 2015 and a few material commitments in the contract stages, we are hopeful that we can show a meaningful improvement in our top line in 2015 and beyond. We are pleased that we have been able to keep growing our top line while continuing to de-emphasize any existing revenue streams that have been low margin intensive for the Company."
"We are also pursuing a number of key acquisition opportunities that are expected to be quite accretive for our shareholders." Robin said. "We also believe that we can increase our reach and top line revenue growth substantially by forging strong strategic alliances with reputed advisory and consulting companies who will market and sell our products to their large client base. We expect to announce one such key relationship soon."
Robin added, "We believe that the Company's recurring revenue streams, cash flow characteristics, sticky client base, On-demand business model, rich domain expertise, strong barriers to entry along with a highly diversified client base etc. are not fully reflected in the Company's present valuation. Accordingly we are committed to expanding our share repurchase plan substantially as we see share repurchases as one of the most accretive ways of generating value for our shareholders."
Robert Kerris, Ebix EVP and CFO said "While we are pleased with the Q2 2015 results, we believe that the Company can improve its operating margins significantly through a number of efficiency initiatives that have been put in place. During the 2nd quarter we facilitated robust returns for our shareholders by paying $12.2 million to repurchase 414,258 shares of our common stock, and paying $2.7 million through the Company's quarterly dividend of $0.075 per share. However, from a liquidity perspective we still have $28.4 million of cash and short-term investments on hand and access to $89.5 million of potential available capacity from the expanded line of credit with Regions Bank to fuel organic growth, to fund the integration of recent business acquisitions, and to pursue additional accretive acquisitions. The Company had a strong operating cash flow performance for the 2nd quarter which was $17.5 million, an increase of $24.8 million from Q1."
A leading international supplier of On-Demand software and E-commerce services to the insurance, financial and healthcare industries, Ebix, Inc., (NASDAQ: EBIX) provides end-to-end solutions ranging from infrastructure exchanges, carrier systems, agency systems and risk compliance solutions to custom software development for all entities involved in the insurance industry.
With 40+ offices across Brazil, Singapore, Australia, the US, UK, 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. For more information, visit the Company's website at www.ebix.com
As used herein, the terms "Ebix," "the Company," "we," "our" and "us" refer to Ebix, Inc., a Delaware corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Ebix, Inc.
The information contained in this Press Release contains forward-looking statements and information within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. This information includes 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. In addition, certain statements included in this and our future filings with the Securities and Exchange Commission ("SEC"), in press releases, and in oral and written statements made by us or with our approval, which are not statements of historical fact, are forward-looking statements. Words such as "may," "could," "should," "would," "believe," "expect," "anticipate," "estimate," "intend," "seeks," "plan," "project," "continue," "predict," "will," "should," and other words or expressions of similar meaning are intended by the Company to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are found at various places throughout this report and in the documents incorporated herein by reference. These statements are based on our current expectations about future events or results and information that is currently available to us, involve assumptions, risks, and uncertainties, and speak only as of the date on which such statements are made.
Our actual results may differ materially from those expressed or implied in these forward-looking statements. Factors that may cause such a difference, include, but are not limited to those discussed in our Annual Report on Form 10-K and subsequent reports filed with the SEC, as well as: the risk of an unfavorable outcome of the pending governmental investigations or shareholder class action lawsuits, reputational harm caused by such investigations and lawsuits, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties; pricing and other competitive pressures and the Company's ability to gain or maintain share of sales as a result of actions by competitors and others; changes in estimates in critical accounting judgments; changes in or failure to comply with laws and regulations, including accounting standards, taxation requirements (including tax rate changes, new tax laws and revised tax interpretations) in domestic or foreign jurisdictions; exchange rate fluctuations and other risks associated with investments and operations in foreign countries (particularly in Australia and India wherein we have significant operations); equity markets, including market disruptions and significant interest rate fluctuations, which may impede our access to, or increase the cost of, external financing; and international conflict, including terrorist acts.
Except as expressly required by the federal securities laws, the Company undertakes no obligation to update any such factors, or to publicly announce the results of, or changes to any of the forward-looking statements contained herein to reflect future events, developments, changed circumstances, or for any other reason.
Readers should carefully review the disclosures and the risk factors described in the documents we file from time to time with the SEC, including future reports on Forms 10-Q and 8-K, and any amendments thereto.
You may obtain our SEC filings at our website, www.ebix.com under the "Investor Information" section, or over the Internet at the SEC's web site, www.sec.gov.
Aaron Tikkoo
678-281-2027 or atikkoo@ebix.com
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 | |||
| 2015 | 2014 | 2015 | 2014 | |
| Operating revenue | $ 64,712 | $ 51,476 | $ 128,465 | $ 102,880 |
| Operating expenses: | ||||
| Cost of services provided | 18,699 | 9,964 | 38,184 | 19,576 |
| Product development | 7,288 | 6,758 | 14,335 | 13,451 |
| Sales and marketing | 3,611 | 3,784 | 6,990 | 7,085 |
| General and administrative, net | 12,121 | 11,068 | 22,867 | 20,909 |
| Amortization and depreciation | 2,570 | 2,441 | 5,167 | 4,993 |
| Total operating expenses | 44,289 | 34,015 | 87,543 | 66,014 |
| Operating income | 20,423 | 17,461 | 40,922 | 36,866 |
| Interest income | 44 | 130 | 105 | 265 |
| Interest expense | (625) | (211) | (1,344) | (458) |
| Non-operating(loss)/income - put options | - | (139) | - | 315 |
| Foreign currency exchange gain (loss) | 330 | (336) | 1,222 | (455) |
| Income before income taxes | 20,172 | 16,905 | 40,905 | 36,533 |
| Income tax expense | (1,136) | (3,326) | (3,533) | (7,537) |
| Net income | $ 19,036 | $ 13,579 | $ 37,372 | $ 28,996 |
| Basic earnings per common share | $ 0.54 | $ 0.35 | $ 1.06 | $ 0.76 |
| Diluted earnings per common share | $ 0.54 | $ 0.35 | $ 1.05 | $ 0.75 |
| Basic weighted average shares outstanding | 35,046 | 38,427 | 35,375 | 38,373 |
| Diluted weighted average shares outstanding | 35,269 | 38,647 | 35,610 | 38,624 |
Ebix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
|
June 30, 2015 |
December 31, 2014 |
| ASSETS | (Unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 27,423 | $ 52,300 |
| Short-term investments | 974 | 281 |
| Trade accounts receivable, less allowances of $1,449 and $1,619, respectively | 47,217 | 41,100 |
| Deferred tax asset, net | 2,115 | 2,113 |
| Other current assets | 9,933 | 8,067 |
| Total current assets | 87,662 | 103,861 |
| Property and equipment, net | 32,250 | 24,661 |
| Goodwill | 412,842 | 402,220 |
| Intangibles, net | 51,656 | 49,371 |
| Indefinite-lived intangibles | 30,887 | 30,887 |
| Deferred tax asset, net | 23,191 | 18,758 |
| Other assets | 5,766 | 4,553 |
| Total assets | $ 644,254 | $ 634,311 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
| Current liabilities: | ||
| Accounts payable and accrued liabilities | $ 23,099 | $ 40,121 |
| Accrued payroll and related benefits | 6,229 | 5,280 |
| Current portion of long term debt and capital lease obligations, net of discount of $9 and $7, respectively | 617 | 936 |
| Current deferred rent | 289 | 268 |
| Contingent liability for accrued earn-out acquisition consideration | 1,887 | 887 |
| Deferred revenue | 20,612 | 22,192 |
| Other current liabilities | 102 | 102 |
| Total current liabilities | 52,835 | 69,786 |
| Revolving line of credit | 150,465 | 120,465 |
| Long term debt and capital lease obligations, less current portion, net of discount of $0 and $7, respectively | 43 | 593 |
| Other liabilities | 2,447 | 2,179 |
| Contingent liability for accrued earn-out acquisition consideration | 8,193 | 4,480 |
| Deferred revenue | 1,803 | 2,496 |
| Long term deferred rent | 1,901 | 2,091 |
| Total liabilities | 217,687 | 202,090 |
| Stockholders’ equity: | ||
| Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at June 30, 2015 and December 31, 2014 | - | - |
| Common stock, $0.10 par value, 60,000,000 shares authorized, 34,937,055 issued and outstanding, at June 30, 2015 and 36,232,074 issued and 36,191,565 outstanding at December 31, 2014 | 3,494 | 3,619 |
| Additional paid-in capital | 103,547 | 137,101 |
| Treasury stock (no shares as of June 30, 2015 and 40,509 shares as of December 31, 2014) | - | (76) |
| Retained earnings | 341,709 | 309,726 |
| Accumulated other comprehensive loss | (22,183) | (18,149) |
| Total stockholders’ equity | 426,567 | 432,221 |
| Total liabilities and stockholders’ equity | $ 644,254 | $ 634,311 |
Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
Six Months Ended | |
| June 30, | ||
| 2015 | 2014 | |
| Cash flows from operating activities: | ||
| Net income | $ 37,372 | $ 28,996 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 5,167 | 4,993 |
| Benefit for deferred taxes | (6,014) | (1,668) |
| Share based compensation | 839 | 882 |
| Provision for doubtful accounts | 301 | 748 |
| Debt discount amortization on promissory note payable | 8 | 18 |
| Unrealized foreign exchange (gain) loss | (920) | 517 |
| Loss on put option | - | (315) |
| Reduction of acquisition earnout accruals | - | (1,762) |
| Changes in assets and liabilities, net of effects from acquisitions: | ||
| Accounts receivable | (3,662) | (2,992) |
| Other assets | (2,606) | 917 |
| Accounts payable and accrued expenses | (18,802 ) | (1,914 ) |
| Accrued payroll and related benefits | 1,104 | 2,007 |
| Deferred revenue | (2,036 ) | (1,128 ) |
| Deferred rent | (125 ) | (195 ) |
| Reserve for potential uncertain income tax return positions | 108 | 3,866 |
| Liability - securities litigation settlement payment | (690) | (4,218) |
| Other liabilities | 111 | (128) |
| Net cash provided by operating activities | 10,155 | 28,624 |
| Cash flows from investing activities: | ||
| Acquisition of Media Health, net of cash acquired | (1,000) | - |
| Acquisition of P.B. Systems, net of cash acquired | (11,480) | - |
| Acquisition of HealthCare Magic, net of cash acquired | - | (5,856) |
| Acquisition of CurePet, Inc., net of cash acquired | - | 3 |
| Payment of acquisition earn-out contingency, Taimma | - | (2,250) |
| Purchases of marketable securities | (704) | (567) |
| Capital expenditures | (10,312) | (13,852) |
| Net cash used in investing activities | (23,496) | (22,522) |
| Cash flows from financing activities: | ||
| Proceeds from / (Repayments) on revolving line of credit, net | 30,000 | (15,000 ) |
| Principal payments of term loan obligation | - | (4,813 ) |
| Repurchases of common stock | (34,481 ) | (2,234 ) |
| Excess tax benefit from share-based compensation | 63 | (3,200 ) |
| Proceeds from the exercise of stock options | 1,117 | 788 |
| Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested | (1,141 ) | (30 ) |
| Dividend payments | (5,389 ) | (5,793 ) |
| Principal payments of debt obligations | (623) | (321) |
| Payments of capital lease obligations | (1) | (103) |
| Net cash used in financing activities | (10,455) | (30,706) |
| Effect of foreign exchange rates on cash | (1,081) | 833 |
| Net change in cash and cash equivalents | (24,877) | (23,771) |
| Cash and cash equivalents at the beginning of the period | 52,300 | 56,674 |
| Cash and cash equivalents at the end of the period | $ 27,423 | $ 32,903 |
| Supplemental disclosures of cash flow information: | ||
| Interest paid | $ 2,964 | $ 436 |
| Income taxes paid | $ 20,926 | $ 6,774 |