×

Ebix Announces Second Quarter 2013 Results

Ebix, Inc. Logo

  • Quarterly Revenue of $51.0 Million, up 7% Year-Over-Year
  • Q2 Diluted EPS of $0.35, down25% Year-Over-Year

ATLANTA, Aug. 9, 2013 (GLOBE NEWSWIRE) -- Ebix, Inc. (Nasdaq:EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today reported results for the fiscal second quarter ended June 30, 2013.

Ebix delivered the following results for the second quarter of 2013:

Revenue: Total Q2 2013 revenue was $51.0 million, an increase of 7% on a year-over-year basis, as compared to Q2 2012 revenue of $47.7 million. During the six months ended June 30, 2013, revenue increased $12.0 million or 13%, to $103.6 million compared to $91.5 million during the same period in 2012.

Earnings per Share: Q2 2013 diluted earnings per share decreased 25% year-over-year to $0.35, as compared to $0.47 in the second quarter of 2012. For purposes of the Q2 2013 EPS calculation, there was an average of 38.8 million diluted shares outstanding during the quarter, which approximately is the same as Q2 2012.

Operating Cash: Cash generated from operations during Q2 2013 was $10.6 million, down 50% year-over-year as compared to $21.0 million in Q2 2012. During the six months ended June 30, 2013, the Company generated $24.8 million of net cash flow from operating activities, a decrease of 28% as compared to $34.7 million in the first six months of 2012.

Margins:Operating margins for Q2 2013 were higher at 37.8% as compared to 37.1% for Q2 2012, and 36.7% for Q1 2013. The operating margins in Q2 2013 were positively impacted by a $5.8 million gain from the reduction of the earn out accrual relating to our acquisition of PlanetSoft, while being negatively impacted by certain legal and extraordinary operational costs adding up to $4.5 million in Q2 of 2013. The Company was also negatively impacted by the impact of lower initial operating margins from some of the businesses acquired in 2012 and 2013, as compared to our existing operations. The Company expects a portion of the legal costs in Q2 of 2013 to continue for a few more quarters, impacting our operating margins negatively.

Diversified Revenue Base: Ebix continued to have highly diversified revenue streams across thousands of clients, with the largest client accounting for less than 2.5% of the Company's Q2 2013 revenues.

Channel Revenues: The Exchange channel continued to be the largest channel for Ebix accounting for 79% of the Company's Q2 2013 Revenues as compared to 80% in Q2 2012.

Three Months Ended
June 30,
Six Months Ended
June 30,
(dollar amounts in thousands) 2013 2012 2013 2012
Exchanges $40,501 $38,182 $82,187 $72,828
Broker Systems 4,766 4,422 9,488 9,176
Business Process Outsourcing ("BPO") 4,013 3,890 8,177 7,461
Carrier Systems 1,724 1,222 3,718 2,078
Totals $51,004 $42,267 $103,570 $91,543

Net Income: Q2 2013 net income was $13.5 million, a 25% decrease on a year-over-year basis, as compared to Q2 2012 net income of $18.1 million. During the six months ended June 30, 2013, net income decreased $2.9 million or 9%, to $30.9 million compared to $33.8 million during the same period in 2012. The net income in Q2 2013 was impacted negatively by the increase in the a variable stock put option liability of $ 1.6 million associated with the issuance of stock to PlanetSoft shareholders worth $5 million, as also by the company increasing certain tax reserves by $2.5 million in Q2 2013.

Share Repurchases: The Company purchased 250,900 shares of its common stock in June at an average price of $9.93 for an aggregate amount of $2.5 million. No shares have been purchased in Q3 2013. The Company currently has approximately $102.9 million remaining in its share repurchase authorization.

Q3 2013 Diluted Share Count: As of today, the Company expects the diluted share count for Q3 2013 to be approximately 38.6 million.

Debt Payments: In Q2 the Company used $5.6 million to reduce its bank debt, and in the month subsequent to June 30th, the Company made additional debt payments in the amount of $7.4 million to further reduce its bank debt, thus bringing its total current bank debt down to $ 62.2 million as of August 9, 2013 date. Our current net debt as of August 9, 2013 is $30.8 million.

Tax Payments: In the first 6 months of 2013, the Company paid $11.8 million of cash in taxes vs. $4.8 million for the same period in 2012.

"With a few distractions in the quarter, Ebix grew its revenue 7% year over year to $51.0 million which did not match our goals for the quarter. The entire Ebix team is currently focused on building our sales pipeline and implementing signed contracts" Ebix Chairman, President & CEO Robin Raina said. "We have had good customer wins in late June and July and are in the process of negotiating large customer contracts. We are focused on generating increased subscription and transaction revenue and adding to our net operating cash flow and income over the next few quarters."

Robin said, "We believe there is great opportunity ahead of us, many of our key initiatives such as the Annuity Maintenance platform, Ebix Enterprise and ADAM-on-Demand are going into active production mode. All these initiatives are targeted at clients that can generate large amounts of recurring revenue streams for us with high operating margins. We are committed to achieving our operating margin target of 40% plus minus a few points as we move away from the events of the last few months."

Robin added, "We believe that many of our utility model services have the ability to lead the industry, in different geographies across the world. We are presently in discussions with numerous clients for deals, that on an individual basis have the potential to change our recurring revenue streams meaningfully. While there are no guarantees that any of these will be closed, we will try our best to sign deals that can have a positive impact on our future."

"During the second quarter Ebix reduced debt on our revolver and other debt by $5.6 million." said Ebix SVP and CFO Robert Kerris. In addition, we bought $2.5 million of shares in June after we announced our $100 million share buyback authorization. During the quarter the Company continued to invest in the growth of the business with the purchase of Qatarlyst for $4.7 million, the payment of $2.4 million in earn-out obligations and $307 thousand of capital expenditures. Our balance sheet reflects the aggregate cash, cash equivalents, and short-term cash deposit investments in the amount of $36.1 million as of June 30, 2013, and working capital of $12.4 million. Our accounts receivable DSO stood at 68 days as of June 30 as compared to 63 days from year-end 2012, and 59 days from a year earlier at June 30, 2012. Our net debt stood at $36.0 million as of June 30, 2013."

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). With a recent ISO 27001-security certification, the Company also has an ISO 9001:27001 certification for both its development and BPO units in India. For more information, visit the Company's website at www.ebix.com.

SAFE HARBOR REGARDING FORWARD-LOOKING STATEMENTS

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.

Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30
2013 2012 2013 2012
Operating revenue $51,004 $47,716 $103,570 $91,543
Operating expenses:
Cost of services provided 10,358 9,157 20,249 18,186
Product development 6,724 5,814 13,759 10,086
Sales and marketing 3,827 4,296 7,739 8,108
General and administrative 8,253 8,577 18,224 15,021
Amortization and depreciation 2,548 2,161 5,000 4,102
Total operating expenses 31,710 30,005 64,971 55,503
Operating income 19,294 17,711 38,599 36,040
Interest income 91 110 184 277
Interest expense (281) (312) (643) (565)
Other non-operating income (loss) (1,425) 262 (1,343) 262
Foreign currency exchange gain (loss) (123) 2,591 (293) 2,295
Income before income taxes 17,556 20,362 36,504 38,309
Income tax expense (4,014) (2,295) (5,618) (4,557)
Net income $13,542 $18,067 $30,886 $33,752
Basic earnings per common share $0.36 $0.49 $0.83 $0.92
Diluted earnings per common share $0.35 $0.47 $0.80 $0.86
Basic weighted average shares outstanding 37,210 36,908 37,189 36,679
Diluted weighted average shares outstanding 38,789 38,827 38,784 39,175
Ebix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
June 30,
2013
December 31,
2012
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $35,394 $36,449
Short-term investments 707 971
Trade accounts receivable, less allowances of $1,595 and $1,157, respectively 38,500 37,298
Deferred tax asset, net 2,047 1,835
Other current assets 5,201 5,116
Total current assets 81,849 81,669
Property and equipment, net 9,226 10,082
Goodwill 333,872 326,748
Intangibles, net 53,969 52,591
Indefinite-lived intangibles 30,887 30,887
Deferred tax asset, net 24,308 11,245
Other assets 3,933 3,724
Total assets $538,044 $516,946
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $23,552 $15,497
Accrued payroll and related benefits 6,464 5,431
Short term debt 12,375 11,344
Contingent liability for accrued earn-out acquisition consideration 6,343 3,265
Current portion of long term debt and capital lease obligations, net of discount of $29 and $13, respectively 845 915
Deferred revenue 16,995 19,888
Put option liability 2,530
Current deferred rent 254 237
Other current liabilities 105 113
Total current liabilities 69,463 56,690
Revolving line of credit 32,840 37,840
Long term debt and capital lease obligations, less current portion, net of discount of $39 and$78, respectively 25,750 31,592
Other liabilities 8,794 6,429
Contingent liability for accrued earn-out acquisition consideration 9,155 14,230
Put option liability 1,186
Deferred revenue 168 375
Long term deferred rent 2,285 1,449
Total liabilities 148,455 149,791
Temporary equity 5,000 5,000
Stockholders' equity:
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at June 30, 2013 and December 31, 2012
Common stock, $0.10 par value, 60,000,000 shares authorized, 37,016,509 issued and 36,976,000 outstanding at June 30, 2013 and 37,131,777 issued and 37,091,268 outstanding at December 31, 2012 3,698 3,709
Additional paid-in capital 162,795 164,346
Treasury stock (40,509 shares as of June 30, 2013 and December 31, 2012) (76) (76)
Retained earnings 229,186 201,094
Accumulated other comprehensive loss (11,014) (6,918)
Total stockholders' equity 384,589 362,155
Total liabilities and stockholders' equity $538,044 $516,946
Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2013 2012
Cash flows from operating activities:
Net income $30,886 $33,752
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,000 4,102
Benefit for deferred taxes (14,119) (956)
Share based compensation 996 1,059
Provision for doubtful accounts 527 316
Debt discount amortization on convertible debt 23 13
Unrealized foreign exchange (gain) loss 339 (593)
(Gain) loss on put option 1,344 (263)
Reduction of acquisition earnout accruals (6,114)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable (2,101) 2,163
Other assets 182 (1,009)
Accounts payable and accrued expenses 7,303 (858)
Accrued payroll and related benefits 1,296 (384)
Deferred revenue (3,051) (225)
Deferred rent 11 (56)
Other liabilities 2,317 (2,338)
Net cash provided by operating activities 24,839 34,723
Cash flows from investing activities:
Acquisition of Qatarlyst, net of cash acquired (4,740)
Investment in MCN (1,537)
Acquisition of BSI, net of cash acquired (992)
Acquisition of Taimma, net of cash acquired (5,003)
Acquisition of Fintechnix, net of cash acquired (4,713)
Acquisition of Planetsoft, net of cash acquired (33,967)
Investment in Curepet, Inc. (2,000)
Investment in Taimma (2,250)
Investment in USIX (727)
Maturities of marketable securities (net of purchases) 225 979
Purchases of marketable securities (785)
Capital expenditures (652) (1,079)
Net cash used in investing activities (8,144) (49,097)
Cash flows from financing activities:
Repayments on revolving line of credit, (net of proceeds) (5,000) 1,090
Proceeds from term loan 45,000
Principal payments of term loan obligation (4,125) (15,000)
Repurchases of common stock (2,492) (9,396)
Excess tax benefit from share-based compensation 50
Proceeds from the exercise of stock options 662 714
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested (728)
Dividend payments (2,794) (3,296)
Principal payments of debt obligations (624) (600)
Payments of capital lease obligations (155) (165)
Net cash provided by/ (used in) financing activities (15,256) 18,397
Effect of foreign exchange rates on cash (2,494) (2,406)
Net change in cash and cash equivalents (1,055) 1,617
Cash and cash equivalents at the beginning of the period 36,449 23,696
Cash and cash equivalents at the end of the period $35,394 $25,313
Supplemental disclosures of cash flow information:
Interest paid $635 $567
Income taxes paid $11,830 $4,842

CONTACT: Investors Steven Barlow, Vice President - Investor Relations 678-281-2043 or steve.barlow@ebix.com Aaron Tikkoo 678-281-2027 or atikkoo@ebix.com Media Andy Brimmer / Tim Lynch / Andrew Siegel Joele Frank, Wilkinson Brimmer Katcher 212-355-4449

Source:Ebix, Inc.