Exela Technologies(US:XELA)2024-05-15 20:06Revenue Performance - For the three months ended March 31, 2024, total revenue decreased by $14.8 million, or 5.4%, to $258.8 million from $273.6 million for the same period in 2023[186]. - ITPS segment revenue decreased by $17.6 million, or 9.1%, primarily due to exiting contracts and the sale of the high-speed scanner business, which resulted in $3.2 million lower revenue[186]. - HS segment revenue increased by $1.8 million, or 2.9%, driven by higher volumes from new and existing healthcare customers[188]. - LLPS segment revenue increased by $1.0 million, or 5.6%, due to an increase in project-based engagements in legal claims administration services[189]. Cost and Expenses - Cost of revenues decreased by $14.5 million, or 6.7%, to $201.99 million for the three months ended March 31, 2024[185]. - Selling, general and administrative expenses decreased by $3.5 million, or 7.95%, to $40.85 million for the same period[185]. - Cost of revenue decreased by $14.5 million, or 6.7%, to $202.0 million for the three months ended March 31, 2024, compared to the same period in 2023[190]. - Cost of revenue as a percentage of revenue improved to 78.0% for the three months ended March 31, 2024, from 79.1% in the prior year[191]. - Total depreciation and amortization expenses decreased by $3.1 million to $13.5 million for the three months ended March 31, 2024[193]. - Selling, general and administrative expenses (SG&A) decreased by $3.5 million, or 7.9%, to $40.9 million for the three months ended March 31, 2024[192]. Net Loss and Financial Performance - Net loss for the three months ended March 31, 2024, was $25.57 million, a decrease of $19.86 million, or 43.72%, compared to a net loss of $45.44 million in the prior year[185]. - Net loss improved to $25.6 million for the three months ended March 31, 2024, compared to a net loss of $45.4 million for the same period in 2023[207]. - Adjusted EBITDA for the three months ended March 31, 2024, was $12.9 million, compared to $14.5 million in the prior year[207]. Cash Flow and Liquidity - Cash, restricted cash, and cash equivalents totaled $34.0 million as of March 31, 2024, with a working capital deficit of $214.3 million[209]. - The Company reported a net cash used in operating activities of $29.1 million for the three months ended March 31, 2024, a decrease of $26.2 million compared to $55.3 million in the same period of 2023[220]. - The Company had a net increase in cash, restricted cash, and cash equivalents of $(33.1) million for the three months ended March 31, 2024, compared to an increase of $5.8 million in the same period of 2023[220]. Debt and Financing - The Company had a total of $980.0 million in outstanding principal amount of 11.5% First-Priority Senior Secured Notes scheduled to mature on July 15, 2026[226]. - As of March 31, 2024, $24.0 million of the July 2026 Notes remained outstanding after periodic repurchases[230]. - The Company issued approximately $767.8 million aggregate principal amount of the April 2026 Notes, which includes notes issued in exchange for existing July 2026 Notes[231]. - Cash used in financing activities for the three months ended March 31, 2024, was $3.5 million, primarily due to $14.9 million of proceeds from borrowings under the BR Exar AR Facility[223]. - The Company plans to pursue further reduction in debt and the sale of non-core businesses to enhance liquidity and support profitable growth[219]. - The Company recorded a premium of $142.3 million on the notes exchange, which will be reduced as contractual interest payments are made on the April 2026 Notes[228]. - As of March 31, 2024, there were borrowings of $40.5 million outstanding under the Senior Secured Term Loan, which is to be repaid in ten equal quarterly installments of $0.5 million commencing April 1, 2024[244]. - The Company entered into a financing agreement for a $40.0 million Senior Secured Term Loan on July 11, 2023, using proceeds to repay existing debt[241]. - The BR Exar AR Facility provided the Company with $14.7 million, with an outstanding balance of $4.2 million as of March 31, 2024[250]. Business Developments - The company completed the sale of its high-speed scanner business for approximately $30.1 million on June 8, 2023, resulting in a pre-tax gain of $7.2 million[174]. - The merger of the European business with CF Acquisition Corp. VIII was completed on November 29, 2023, and the new entity began trading on Nasdaq under the ticker symbol "XBP" on November 30, 2023[173]. Internal Controls and Compliance - The Company maintains disclosure controls and procedures designed to provide reasonable assurance for timely financial reporting[257]. - The Executive Chairman and Interim Chief Financial Officer concluded that the disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[258]. - Despite the material weaknesses, the condensed consolidated financial statements present fairly the financial position and results of operations in conformity with U.S. GAAP[259]. - The Company continues to implement a remediation plan to address the identified material weaknesses[260]. - There have been no changes in internal control over financial reporting that materially affected the reporting during the quarter ended March 31, 2024[261]. Market Risk - There have been no material changes to the Company's market risk during the three months ended March 31, 2024[255].