Exela Technologies(US:XELA)2022-05-10 21:45Financial Data and Key Metrics Changes - Revenue for Q1 2022 was reported at $279.4 million, down 6.9% year-over-year, while on a constant currency basis, it was $283.1 million, down 5.6% year-over-year [49] - Adjusted EBITDA was $36.1 million, representing a decrease of 22.2% from $46.5 million in the prior year [58] - Gross profit margin for Q1 was 20%, down 248 basis points year-over-year [58] Business Line Data and Key Metrics Changes - ITPS segment revenue was $205 million, a decrease of 11.6% from $231.9 million in Q1 2021, primarily due to softness in pre-COVID volumes and staffing impacts [54] - Healthcare Solutions segment revenue increased by 10.8% year-over-year to $56.6 million, driven by higher volumes and expansion with existing clients [55] - Legal and Loss Prevention segment revenue was $17.8 million, a 4.1% increase year-over-year, attributed to higher project revenue [56] Market Data and Key Metrics Changes - The company added 41 enterprise logos in Q1, indicating positive momentum and growth opportunities [19][20] - The SMB business growth rate was reported at 39% quarter-over-quarter, with DrySign experiencing a 200% growth [29] Company Strategy and Development Direction - The company aims to invest for growth despite previous slowdowns, focusing on expanding investments due to signs of growth [11] - A hybrid business model is being pursued, combining current business growth with future expansion opportunities [14] - The company is adopting an "uberization" model to enhance workforce flexibility and reduce dependency on full-time employees [40][102] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for revenue growth as customer demand picks up, particularly in healthcare and ITPS segments [70] - The company is focused on improving margins through cost-saving initiatives and productivity improvements [70][93] - Management acknowledged challenges in the public sector business but indicated plans to leverage existing backlog for future growth [36][101] Other Important Information - The company raised $119 million through common stock sales, primarily to invest in business and retire debt [28] - Liquidity as of March 31, 2022, was reported at $71 million, excluding the benefits of a new $51 million revolver [28][46] - The company is not providing formal guidance for FY 2022 but suggests using historical metrics for modeling purposes [63] Q&A Session Summary Question: Areas of business expected to improve in 2022 - Management highlighted that TCV events will start converting and there is an uptick in volumes in healthcare and ITPS [68][70] Question: Insights on the 41 new enterprise logos - The new logos reflect a healthier balance sheet and improved conversations with clients [71][74] Question: Free cash flow impacts in Q1 - A significant $40 million payment for an appraisal action settlement impacted cash flows, but improvements are expected in future quarters [80][81] Question: Plans for debt repayment over the next 15 months - The company aims to balance debt and equity, utilizing improved balance sheet structures to manage debt maturities efficiently [82][84] Question: Managing inflation and workforce shortages - The company is implementing an uberization model to add part-time employees, which helps manage costs and meet service level agreements [102]