Ebix(US:EBIX)2022-05-09 16:00Debt and Financing - As of March 31, 2022, the outstanding balance on the Revolver was $439.4 million, with an interest rate of 5.50%[119] - The outstanding balance on the Term Loan was $204.5 million, also carrying an interest rate of 5.50%[120] - The Company expects to refinance the Credit Facility during 2022, contingent upon the successful IPO of EbixCash Limited[115] - The Company has $3.7 million of remaining deferred financing costs related to the Credit Facility, amortized as interest expense[118] - The Credit Facility, totaling $643.9 million, was classified as a current liability as of March 31, 2022[115] - The Company had $643.9 million in outstanding debt obligations as of March 31, 2022, including a $204.5 million term loan and a $439.4 million balance on the revolving line of credit[232] - The interest rate on the Company's term loan and revolving line of credit was 5.50% as of March 31, 2022, exposing the Company to potential increases in interest expense[232] - A hypothetical 30% increase in the LIBOR rate could reduce pre-tax income by approximately $0.3 million for both the three months ended March 31, 2022, and 2021[232] - A hypothetical 20% decrease in interest rates earned on deposited funds would have resulted in a reduction to pre-tax income of approximately $0.1 million for both the three months ended March 31, 2022, and 2021[232] Revenue and Income - External revenues for India were $225.9 million for the three months ended March 31, 2022, compared to $231.5 million for the same period in 2021, reflecting a decrease of approximately 2.5%[139] - Total operating revenues for the three months ended March 31, 2022, decreased by $3.8 million, or 1%, to $286.3 million compared to $290.1 million in the same period of 2021[182] - International revenue accounted for 86.4% of total revenue for the three months ended March 31, 2022, compared to 86.9% in the same period of 2021[182] - The decline in payment solutions offerings in India decreased by approximately $13.6 million, or 6.7%, which was a significant factor in the overall revenue decrease[182] - The Company recorded a net income tax expense of $1.7 million (8.49%) for the three months ended March 31, 2022, with an effective tax rate expected to be in the range of 9% to 12% for the full year[135] - The Company expects its full year effective tax rate to be in the range of 9% to 12%[193] Expenses - Cost of services provided decreased by $9.5 million, or 4%, to $210.8 million, resulting in a decrease in cost of services as a percentage of total revenues to 73.7% from 76.0%[183] - Product development expenses increased by $0.7 million, or 7%, to $10.3 million during the first quarter of 2022, driven by increased labor costs primarily in India[184] - General and administrative expenses increased by $5.6 million, or 26%, to $26.9 million, primarily due to increased personnel costs and bad debt expense[187] - Interest expense increased by 27% to $10.3 million, despite a decrease in the average outstanding balance under corporate credit facilities[190] Assets and Liabilities - The total long-lived assets as of March 31, 2022, amounted to $1.22 billion, an increase from $1.19 billion as of December 31, 2021[139] - The carrying value of goodwill decreased to $931.6 million as of March 31, 2022, from $939.2 million as of December 31, 2021, primarily due to foreign currency translation adjustments[144] - The total lease liabilities amounted to $11.7 million as of March 31, 2022, with long-term lease liabilities of $7.1 million[151] - The Company had a liability reserve for uncertain tax positions of $6.3 million as of March 31, 2022, reflecting an increase of $72 thousand from the previous year[136] - Customer advances (deposits) increased to $26.416 million as of March 31, 2022, up from $24.393 million at the end of 2021[154] - The Company reported a negative working capital position of $458.7 million due to the classification of the Credit Facility as a current liability[216] Cash Flow - Net cash provided by operating activities for the three months ended March 31, 2022, was $5.6 million, with net income of $19.2 million and $4.4 million in depreciation and amortization[208] - Net cash used for investing activities during the same period was $11.5 million, primarily for $9.3 million in capital expenditures and $2.7 million in capitalized software development costs[210] - Net cash used in financing activities for the three months ended March 31, 2022, was $15.3 million, including $8.4 million for principal payments on the term loan and $2.3 million in dividends[212] Legal and Regulatory - The Company is involved in various legal actions, but management believes these will not materially affect its financial position[134] - The Company has not experienced any material changes to its internal controls over financial reporting despite remote work due to the COVID-19 pandemic[237] - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective as of March 31, 2022[237] - The Company continuously monitors the impact of COVID-19 on the operating effectiveness of its internal control over financial reporting[237] Foreign Currency and Geopolitical Impact - The Company experienced unrealized foreign currency translation losses of $(11.3) million for the three months ended March 31, 2022[231] - The Company reported unrealized losses of $(11.3) million and $(3.9) million in the cumulative foreign currency translation account for the three months ended March 31, 2022 and 2021, respectively[231] - A hypothetical adverse change of 20% in foreign currency exchange rates could have reduced pre-tax income by approximately $2.8 million and $2.6 million for the three months ended March 31, 2022 and 2021, respectively[231] - The company continues to monitor the impacts of geopolitical events, including the situation in Ukraine, which may affect global economic conditions[175] Technology and Development - The Company capitalized $2.7 million in software development costs during the three months ended March 31, 2022, compared to $1.7 million in the same period of 2021[146] - The Company recognized $755 thousand of amortization expense for capitalized software development costs during the three months ended March 31, 2022[147] - The company's technology vision focuses on the convergence of all channels and processes to enhance data flow and operational efficiency[166]