Exela Technologies(XELA) - 2024 Q2 - Quarterly Results

Financial Highlights Exela Technologies reported a 10.0% year-over-year revenue decline to $245.7 million in Q2 2024, with gross margin improving to 23.5% but Adjusted EBITDA falling 39.0% to $13.7 million Q2 2024 Key Financial Metrics | Metric | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $245.7 million | -10.0% | | Gross Margin | 23.5% | +120 bps | | Interest Expense | $23.1 million | -48.7% | | SG&A | $41.8 million | +30.5% | | Operating (Loss)/Profit | ($2.4 million) | vs. $11.2M profit | | Net Loss | ($26.9 million) | +$4.0M improvement | | Adjusted EBITDA | $13.7 million | -39.0% | Segment Performance Revenue decline was primarily driven by a 15.2% drop in Information and Transaction Processing Solutions, while Legal & Loss Prevention Services grew by 6.3% Q2 2024 Revenue by Segment (YoY) | Segment | Q2 2024 Revenue | Change (YoY) | | :--- | :--- | :--- | | Information and Transaction Processing Solutions | $156.8 million | -15.2% | | Healthcare Solutions | $62.9 million | -1.1% | | Legal & Loss Prevention Services | $25.9 million | +6.3% | Detailed Financial Analysis Gross margin improved to 23.5% and interest expense decreased by 48.7%, but a 30.5% increase in SG&A, driven by a non-cash write-down, led to an operating loss - Gross margin increased by 1.2% year-over-year to 23.5% due to lower costs[3] - Interest expense decreased by 48.7% YoY to $23.1 million, attributed to the company's debt modification in July 2023[4] - SG&A expenses increased by 30.5% YoY, primarily due to a $10.1 million non-cash write-down from a partner contract amendment and the absence of a $6.6 million gain on sale recognized in Q2 2023[4] - The company recorded an operating loss of $2.4 million, compared to an $11.2 million profit in Q2 2023, driven by lower revenue and higher SG&A[4] Financial Statements This section presents the unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, and Statements of Cash Flows, for the period ended June 30, 2024 Condensed Consolidated Balance Sheets As of June 30, 2024, total assets were $588.0 million, total liabilities approximately $1.50 billion, and total stockholders' deficit widened to $908.7 million Balance Sheet Summary | Account | June 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $156,601 | $181,208 | | Total Assets | $587,953 | $636,337 | | Total Current Liabilities | $411,029 | $394,882 | | Total Liabilities | $1,496,687 | $1,495,172 | | Total Stockholders' Deficit | ($908,734) | ($858,835) | Condensed Consolidated Statements of Operations For Q2 2024, revenue was $245.7 million and net loss was $26.9 million, with loss per share improving to ($4.40) compared to Q2 2023 Statement of Operations Summary - Q2 | Metric | Q2 2024 (in thousands, except per share) | Q2 2023 (in thousands, except per share) | | :--- | :--- | :--- | | Revenue | $245,653 | $272,938 | | Operating (Loss)/Profit | ($2,354) | $11,224 | | Net Loss | ($26,905) | ($30,886) | | Loss Per Share (Basic & Diluted) | ($4.40) | ($5.19) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, operating cash outflow significantly improved to $16.9 million, with cash and restricted cash decreasing by $15.9 million to $51.3 million Cash Flow Summary - Six Months Ended June 30 | Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($16,926) | ($54,741) | | Net cash (used in)/provided by investing activities | ($3,087) | $24,478 | | Net cash provided by financing activities | $3,776 | $38,561 | | Net (decrease)/increase in cash | ($15,893) | $8,443 | | Cash, restricted cash, and cash equivalents, end of period | $51,260 | $53,510 | Non-GAAP Financial Measures Q2 2024 Adjusted EBITDA decreased 39.0% to $13.7 million, with a 5.6% margin, and constant currency revenue was $246.0 million Reconciliation of Net Loss to Adjusted EBITDA - Q2 | Line Item | Q2 2024 (in millions) | Q2 2023 (in millions) | | :--- | :--- | :--- | | Net loss (GAAP) | ($26.9) | ($30.9) | | Income tax expense | $2.0 | $2.5 | | Interest expense, net | $23.1 | $45.1 | | Depreciation and Amortization | $15.0 | $14.9 | | EBITDA (Non-GAAP) | $13.3 | $31.6 | | Adjustments | $0.4 | ($9.1) | | Adjusted EBITDA | $13.7 | $22.5 | - Constant currency revenue for Q2 2024 was $246.0 million, reflecting a minor positive impact of $0.3 million from foreign currency exchange[14] Company Information and Disclosures This section provides an overview of Exela Technologies' business operations and includes important disclosures regarding forward-looking statements About Exela Technologies Exela Technologies is a global business process outsourcing and automation company serving over 4,000 customers, including Fortune 100 companies, with approximately 13,100 employees across 20 countries - Exela is a business process outsourcing (BPO) and automation leader with a global footprint[7] - The company serves over 4,000 customers, including more than 60% of the Fortune® 100[7] - Operations are supported by approximately 13,100 employees in 20 countries[7] Forward-Looking Statements This section contains a standard safe harbor statement regarding forward-looking statements, which are subject to risks and uncertainties detailed in SEC filings - The report contains forward-looking statements that are not historical facts and are subject to risks and uncertainties[10] - These statements are based on current expectations and are not predictions of actual performance[10]