Ebix(US:EBIX)2022-08-08 16:00Debt and Financing - As of June 30, 2022, the outstanding balance of the Credit Facility was $636.3 million, classified as a current liability due to its maturity in February 2023[123] - The outstanding balance on the Revolver was $439.4 million with an interest rate of 7.25% as of June 30, 2022, compared to 5.50% at December 31, 2021[127] - The Term Loan balance was $196.9 million as of June 30, 2022, with $15.9 million in principal payments made during the first half of 2022[128] - The Company expects to refinance the Credit Facility during 2022, contingent on the anticipated IPO of EbixCash Limited[123] - The Company intends to access debt and/or equity capital markets for refinancing, with no assurances on the availability of financing on acceptable terms[123] - The Company has $4.8 million of remaining deferred financing costs related to the Credit Facility as of June 30, 2022[126] - The company had $636.3 million in outstanding debt obligations as of June 30, 2022, which included a $196.9 million term loan and a $439.4 million balance on the Revolver[246] - The average cash balances during the six months ended June 30, 2022, were approximately $115.0 million, with existing cash balances of $67.5 million as of June 30, 2022[246] - The Company has not engaged in off-balance sheet financing arrangements[238] Revenue and Income - External revenues for the six months ended June 30, 2022, totaled $537.0 million, compared to $536.4 million for the same period in 2021, reflecting a slight increase[146] - Total operating revenues for the three months ended June 30, 2022, increased by $4.5 million, or 2%, to $250.8 million compared to $246.3 million in the same period of 2021[184] - For the six months ended June 30, 2022, total operating revenues increased by $0.7 million to $537.0 million compared to $536.4 million in the same period of 2021[196] - International revenue accounted for 85.7% of total revenue for the six months ended June 30, 2022, slightly down from 85.9% in the same period of 2021[171] - International revenue accounted for 84.9% of total revenue for the three months ended June 30, 2022, compared to 84.7% in the same period of 2021[184] Expenses and Costs - Cost of services provided decreased by $18.4 million, or 5%, to $380.2 million for the six months ended June 30, 2022, with a decrease in cost as a percentage of total revenues to 70.8%[199] - Product development expenses increased by $0.8 million, or 4%, to $20.5 million for the six months ended June 30, 2022, driven by increased personnel costs primarily in India[200] - General and administrative expenses increased by $8.4 million, or 36%, to $31.7 million in the second quarter of 2022 compared to $23.3 million in the same period of 2021[189] - General and administrative expenses increased by $14.0 million, or 31%, to $58.6 million for the six months ended June 30, 2022, compared to $44.7 million for the same period in 2021[202] - Interest expense increased by 11% to $11.7 million in the second quarter of 2022, despite a decrease in the average outstanding balance under corporate credit facilities[192] - Interest expense increased by 18% to $21.9 million for the six months ended June 30, 2022, from $18.5 million in the same period in 2021, despite a decrease in the average outstanding balance under corporate credit facilities[206] - Amortization and depreciation expenses rose by $1.5 million, or 19%, to $9.2 million in the six months ended June 30, 2022, from $7.8 million in the comparable period of 2021[203] Taxation - The Company recorded a net income tax expense of $2.5 million (11.62%) for the three months ended June 30, 2022, and $4.2 million (10.10%) for the six months ended June 30, 2022[142] - The Company expects its full year effective tax rate to be in the range of 9% to 10%[142] - As of June 30, 2022, the Company had a liability of $6.4 million for uncertain tax positions, an increase from $6.2 million as of December 31, 2021[143] - The effective tax rate for the company is expected to be in the range of 9% to 10% for the full year[195] Legal Matters - The Company is involved in various legal actions, including a class action lawsuit alleging violations of the Securities Exchange Act of 1934[132] - The Company believes that claims related to the arbitration with former shareholders of Itz Cash Card Limited are without merit and is defending its position vigorously[140] Cash Flow and Liquidity - Net cash provided by operating activities was $21.4 million for the six months ended June 30, 2022, with net income of $38.5 million as a primary component[224] - Net cash used for investing activities was $17.0 million for the six months ended June 30, 2022, primarily for capital expenditures and software development costs[226] - Net cash used in financing activities was $24.1 million for the six months ended June 30, 2022, mainly for principal payments on existing term loans and dividends[228] - The company's current ratio decreased to 0.43 at June 30, 2022, from 1.79 at December 31, 2021, due to the classification of the Credit Facility as a current liability[212] - The company plans to utilize cash flows from operating activities and refinancing of the Credit Facility to fund growth initiatives and capital expenditures[217] Foreign Currency and Exchange - The net change in the cumulative foreign currency translation account for the six months ended June 30, 2022, was an unrealized loss of $54.6 million, compared to a loss of $12.5 million for the same period in 2021[245] - A hypothetical 20% adverse change in foreign currency exchange rates could have resulted in a reduction to pre-tax income of approximately $6.9 million for the six months ended June 30, 2022[245] - The company recorded a net foreign currency exchange gain of $3.2 million for the three months ended June 30, 2022[194] - The company recorded a net foreign currency exchange gain of $4.1 million for the six months ended June 30, 2022, compared to a loss of $(0.6) million in the prior year period[208] Lease Obligations - Total long-term lease liabilities amount to $6,934,000, with $6,720,000 from operating leases and $214,000 from financing leases[159] - The company reported a total net lease cost of $2,041,000 for the six months ended June 30, 2022, compared to $2,656,000 for the same period in 2021, reflecting a decrease of approximately 23%[161] - The company’s lease liability was reported at $10.5 million as of June 30, 2022, excluding certain arrangements[160] - The weighted average lease term for operating leases is 4.2 years, while for finance leases it is 2.4 years[161] - The weighted average discount rate for operating leases is 7.6%, and for finance leases, it is 6.1%[161] - The company experienced a rental expense of $6.3 million for the six months ended June 30, 2022, compared to $5.4 million for the same period in 2021, indicating an increase of approximately 17%[161] Software Development - The Company capitalized software development costs of $1.5 million and $4.2 million for the three and six months ended June 30, 2022, respectively, compared to $1.4 million and $3.1 million for the same periods in 2021[154] Accounting Policies - There were no significant changes to critical accounting policies and estimates from the previous fiscal year[243]