Exela Technologies(US:XELA)2021-11-08 13:00Revenue Performance - For the three months ended September 30, 2021, total revenue decreased by $26.1 million, or 8.5%, to $279.2 million compared to $305.3 million for the same period in 2020[201]. - ITPS segment revenue decreased by $26.1 million, or 11.1%, primarily due to lower volumes and underutilization of resources related to COVID-19[201]. - HS segment revenue decreased marginally by $0.2 million, or 0.4%, compared to the same period in the prior year[202]. - LLPS segment revenue increased by $0.2 million, or 1.3%, primarily due to an increase in legal claims administration services[202]. - For the nine months ended September 30, 2021, total revenue decreased by $106.2 million, or 10.8%, to $872.3 million from $978.5 million for the same period in 2020[216]. - The ITPS segment revenue decreased by $104.1 million, or 13.7%, primarily due to exiting contracts and lower transaction volumes related to COVID-19[216]. Cost and Expenses - Cost of revenue decreased by $22.5 million, or 9.6%, compared to the three months ended September 30, 2020[204]. - ITPS segment costs decreased by $26.0 million, or 14.1%, while costs for HS and LLPS segments increased by 6.3% and 8.6%, respectively[204]. - The cost of revenue decreased by $115.2 million, or 15.0%, to $653.4 million for the nine months ended September 30, 2021, driven by lower employee-related costs and operational efficiencies[220]. - Cost of revenue as a percentage of total revenue improved to 74.9% for the nine months ended September 30, 2021, compared to 78.5% for the same period in 2020[222]. - SG&A expenses decreased by $18.7 million, or 13.3%, to $121.5 million for the nine months ended September 30, 2021, as a result of lower employee-related costs and operational efficiencies[223]. - Depreciation and amortization expenses decreased by $10.0 million, or 14.7%, to $58.1 million for the nine months ended September 30, 2021[224]. Net Loss and Profitability - Net loss for the three months ended September 30, 2021, was $13.2 million, a decrease of $15.1 million, or 53.3%, compared to a net loss of $28.3 million in the prior year[200]. - The net loss for the nine months ended September 30, 2021, was $71.8 million, a decrease of $17.9 million, or 19.96%, compared to the net loss of $89.7 million for the same period in 2020[215]. - For the three months ended September 30, 2021, the net loss was $13.2 million, a significant improvement from a net loss of $28.3 million in the same period of 2020, representing a reduction of approximately 53.3%[237]. - Adjusted EBITDA for the nine months ended September 30, 2021, was $133.8 million, slightly down from $136.2 million in the same period of 2020, indicating a decrease of about 1.0%[243]. - The company experienced an increase in operating profits by $24.6 million, excluding depreciation and amortization, for the nine months ended September 30, 2021[264]. Cash Flow and Liquidity - As of September 30, 2021, cash and cash equivalents totaled $171.0 million, with no unutilized availability under the senior secured revolving credit facility[245]. - For the nine months ended September 30, 2021, net cash used in operating activities was $(73.6) million, an increase of $7.4 million compared to $(66.2) million in 2020[263]. - Net cash provided by investing activities decreased by $31.4 million to $(3.6) million for the nine months ended September 30, 2021, primarily due to $50.0 million cash proceeds from asset sales in 2020[265]. - Cash provided by financing activities increased significantly to $178.0 million for the nine months ended September 30, 2021, compared to $66.9 million in 2020, driven by $265.2 million of net proceeds from equity offerings[266][267]. - The company had a net increase in cash and cash equivalents of $100.7 million for the nine months ended September 30, 2021, compared to $29.1 million in 2020[263]. Debt and Financing - The company has reduced net debt by $190.0 million under previously announced initiatives, aiming to increase free cash flows and maintain sufficient liquidity[249]. - The company issued $1.0 billion in aggregate principal amount of 10.0% First Priority Senior Secured Notes due 2023, with interest payments commencing on January 15, 2018[279]. - As of September 30, 2021, the company had outstanding irrevocable letters of credit totaling approximately $15.0 million under the senior secured revolving facility[278]. - The company’s total indebtedness related to the Novitex Business Combination amounted to $1.4 billion, used to pay off existing credit facilities[269]. - As of September 30, 2021, the company had $1,440.9 million of debt outstanding, with a weighted average interest rate of 9.4%[292]. - The company had borrowings of $91.9 million outstanding under the Securitization Facility as of September 30, 2021[288]. - A 1% increase or decrease in the assumed weighted average interest rate would impact interest expense by approximately $14.4 million per year[292]. - The company entered into a LIBOR interest rate swap contract with a notional amount of $347.8 million, which fixed the interest rate at 1.9275% effective January 12, 2018[292]. - The interest rate swap contract expired in January 2021, and changes in its fair value were recorded directly to other expense (income), net[293]. - The company may seek to raise additional debt or equity financing through private placements or underwritten offerings in the future[289]. Strategic Initiatives - The company plans to continue pursuing the sale of non-core businesses and invest in acquisitions that enhance its value proposition[249]. - The company completed the sale of its physical records storage and logistics business for a purchase price of $12.3 million, which can be used for acquisitions and investments[258]. - The company expects the provisions of the CARES Act to materially benefit its operations, particularly through refundable payroll tax credits[256]. - The company is exploring potential strategic transactions, including joint ventures and acquisitions, which may require additional financing[289]. Employee and Operational Metrics - The company had approximately 17,500 employees globally as of September 30, 2021, with 55% located in the Americas and EMEA[194]. - Personnel costs for the three months ended September 30, 2021, were $130.4 million, down from $148.7 million in the same period in 2020[195]. - There are no material off-balance sheet arrangements as of September 30, 2021, indicating no significant exposure to financing or liquidity risks[291]. - The company is exposed to foreign currency risks from normal business operations, including intercompany loans and transactions in foreign currencies[294]. - The company does not use derivatives for trading purposes or speculative activities, focusing instead on managing market risks[295].