Ebix(US:EBIX)2023-11-13 16:00Debt Obligations - As of September 30, 2023, the outstanding balance of the Credit Facility was $616.8 million, classified as a current liability [119]. - The outstanding balance on the Revolver was $444.9 million with an interest rate of 13.43% as of September 30, 2023, compared to $449.9 million and 9.69% at December 31, 2022 [128]. - The outstanding balance on the Term Loan was $171.9 million, also carrying an interest rate of 13.43% as of September 30, 2023, down from $189.4 million and 9.69% at December 31, 2022 [129]. - The Company must refinance or pay off the entire $616.8 million of outstanding debt by November 15, 2023, as per the Forbearance Agreement [222]. - The Company is exploring a part-sale of its North America assets, with potential proceeds that could substantially or fully repay the outstanding indebtedness [223]. - The IPO of the Company's Indian subsidiary, EbixCash, could raise up to $787 million, with approximately $360 million aimed at reducing Ebix Inc.'s outstanding debt [225]. - If the IPO is completed before the Forbearance Period expires, the Company expects to reduce its overall debt by at least 50% [226]. - The Company had $616.8 million of outstanding debt obligations as of September 30, 2023, which included a $171.9 million term loan and a $444.9 million balance on the revolving line of credit [265]. Financial Performance - As of September 30, 2023, the company recorded external revenues of $480.4 million, with $114.7 million from North America and $365.8 million from international markets [166]. - Total revenues decreased by 53.8% year-over-year during Q3 2023 compared to Q3 2022, and 52.9% on a constant currency basis [205]. - Operating revenues for Q3 2023 were $119.2 million, a decrease of $1.3 million, or 1%, from $120.5 million in Q3 2022 on a Non-GAAP basis [206]. - International revenue accounted for 76.1% of total revenue for the nine months ended September 30, 2023, down from 85.1% in the same period of 2022 [194]. - International revenue accounted for 69.0% of total revenue in Q3 2023, down from 85.4% in Q3 2022 [207]. - The company reported a net income tax expense of $1.3 million for the nine months ended September 30, 2023, including $1.9 million from discrete items [162]. - The company expects its full year effective tax rate to be in the range of 8% to 10% [162]. Legal and Arbitration Matters - The final award from arbitration mandated the Company to buy the remaining 20% of ItzCash at fair value and pay INR 70.55 million ($855K) for legal cases [138]. - The Company has not yet resolved the anticipated IPO of EbixCash, with no assurances on the timing or terms of completion [119]. - The NCLT dismissed Ebix Singapore's application to declare Educomp as a non-going concern on October 9, 2023 [142]. - The Company and Ebix Singapore Pte. Ltd. purchased 80% equity shares of ItzCash, with a dispute raised by former shareholders regarding breaches of agreements, currently under arbitration [276]. - The arbitral tribunal mandated the Company to buy the remaining 20% stake at fair value and ordered payment of INR 70.55 million ($855K) and SGD 187,681.06 for legal cases [277]. - The Company has filed an appeal against the arbitration order regarding the Zillious buyout, asserting that the claims are not valid [293]. - The arbitration proceedings concerning ItzCash concluded with a partial award indicating breaches by the Company and Ebix Singapore, resulting in nominal damages awarded to claimants [276]. - Amadeus advanced $15 million to Ebix under the Global Agreement, which was to be recovered from ticket sales [294]. - The Arbitral Tribunal ruled that Ebix must pay Amadeus a total of EUR 12,061,814, which is approximately $12.893 million, after adjusting for ticket sales [296]. - No damages were awarded to Amadeus, and the amounts awarded were merely to return the sums advanced [297]. Cash Flow and Liquidity - The Company reported net cash provided by operating activities of $3.4 million for the nine months ended September 30, 2023, compared to $45.1 million for the same period in 2022 [237][238]. - The Company's unrestricted cash and cash equivalents were $71.2 million as of September 30, 2023, down from $110.6 million at December 31, 2022 [230]. - Net cash used in financing activities was $27.0 million for the nine months ended September 30, 2023, primarily for principal payments on the existing term loan [241]. - The average cash balances during the nine months ended September 30, 2023, were approximately $101.1 million, with existing cash balances of $71.2 million as of September 30, 2023 [265]. Asset Management - The carrying value of goodwill decreased to $879.3 million as of September 30, 2023, down from $939.2 million at the end of 2022 [171]. - The company’s total long-lived assets amounted to $1.2 billion as of September 30, 2023, with $386.2 million in North America and $816.9 million internationally [166]. - The total lease liabilities amounted to $9.347 million, with a present value of lease liabilities at $8.207 million, indicating a decrease from the previous period [177]. - The company’s net assets recorded under operating and finance leases were $7.7 million as of September 30, 2023, compared to $9.6 million as of December 31, 2022 [178]. Operational Expenses - Cost of services decreased by 59.8% for the nine months ended September 30, 2023, compared to the same period in 2022 [208]. - Product development expenses increased by $0.5 million, or 5%, to $11.0 million in Q3 2023 compared to $10.5 million in Q3 2022 [209]. - General and administrative expenses rose by $9.5 million, or 28%, to $43.9 million in Q3 2023 compared to $34.4 million in Q3 2022 [211]. - Interest expense increased by 82% to $28.2 million in Q3 2023 from $15.5 million in Q3 2022 [214]. Currency and Exchange Rates - The net change in the cumulative foreign currency translation account for the nine months ended September 30, 2023, was an unrealized loss of $4.8 million, compared to a loss of $90.1 million for the same period in 2022 [264]. - A hypothetical 20% adverse change in foreign currency exchange rates could have resulted in a reduction to pre-tax income of approximately $9.1 million for the nine months ended September 30, 2023 [264]. - The company recorded a net foreign currency exchange gain of $2.4 million for Q3 2023 [216].