IRVING, Texas, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Exela Technologies, Inc. (NASDAQ: XELA), a location-agnostic global business process automation (“BPA”) leader across numerous industries, announced today its financial results for the third quarter ended September 30, 2020.

“The COVID-19 pandemic has impacted everyone to some degree, including Exela and our customers. While some uncertainty related to the pandemic still remains, we continue to execute well against our plan for value creation in this current environment. Our sequential margin expansion, improving cash flow and rising liquidity in the third quarter is further evidence of our progress,” said Ronald Cogburn, Chief Executive Officer of Exela.

Third Quarter 2020 Financial Highlights

• Revenue: Revenue for the third quarter of 2020 was $305.3 million, a decline of 18.3% from $373.5 million in the third quarter of 2019.
  • Revenue for the Information and Transaction Processing Solutions segment was $234.4 million, a decline of 19.9% year-over-year, primarily due to reduced customer volumes as a result of COVID-19, as well as the exit of contracts and statements of work from certain customers with revenue that the Company believes are unpredictable, non-recurring, and were not a strategic fit to its long-term success or unlikely to achieve long-term target margins (“transition revenue”).
  • Healthcare Solutions revenue was $54.2 million, a decrease of 12.8% year-over-year, driven by reduced volumes as a result of COVID-19. Healthcare solutions revenue increased 10.2% from $49.2 million in the second quarter of 2020, driven by increased volumes.
  • Legal and Loss Prevention Services revenue was $16.7 million, a decline of 11.2% year-over-year primarily due to a decline in legal claims administration services.
  • Revenue excluding pass through revenues from postage and postage handling with either zero or nominal margins (“pass through revenue”) ⁽⁴⁾ was $254.4 million in the third quarter of 2020, representing a decrease of 17.9% from $309.9 million in the third quarter of 2019. Revenue excluding pass through revenue increased 0.8% sequentially from $252.5 million in the second quarter of 2020.
  • 82% of third quarter 2020 revenue was earned in the Americas, 17% in EMEA and 2% in rest of world.
• Operating income / (loss): Operating income for the third quarter of 2020 was $4.8 million, compared with operating loss of $93.9 million in the third quarter of 2019. The year-over-year increase in operating income was attributable to gross margin improvements of 237 basis points driven by realigning capacity and costs to reflect changes in customer volumes, lower SG&A expense due to cost containment and lower depreciation and amortization expense in the third quarter of 2020. Additionally, there was no impairment of goodwill and other intangible asset costs in the third quarter of 2020 compared with $97.2 million in the third quarter of 2019.
• Net Loss: Net Loss for the third quarter of 2020 was $28.3 million, compared with a net loss of $131.3 million in the third quarter of 2019.
• Adjusted EBITDA: Adjusted EBITDA for the third quarter of 2020 was $48.7 million, a decrease of 19.6% from $60.5 million in the third quarter of 2019, and an increase of 13.0% from $43.1 million in the second quarter of 2020. Adjusted EBITDA margin for the third quarter of 2020 was 16.0%, consistent with 16.2% in third quarter of 2019 and up 200 basis points from 14.0% in second quarter of 2020. The sequential improvement in third quarter 2020 Adjusted EBITDA margin reflects flow through of the Company’s ongoing cost containment initiatives.

  Adjusted EBITDA margin was 19.1%, based on revenue excluding pass through revenue, in the third quarter of 2020, an increase from 17.1% compared to second quarter of 2020 on flat revenue. Adjusted EBITDA margin was at 19.5% for the third quarter of 2019.

• Capital Expenditures: Capital expenditures for the third quarter of 2020 were 0.6% of revenue compared to 0.7% of revenue in the third quarter of 2019.
• Common Stock: As of September 30, 2020, there were 147,511,430 total shares of common stock outstanding and an additional 4,109,949 shares of common stock reserved for issuance for our outstanding preferred shares on an as-converted basis.
• Total employees as of September 30, 2020 were 21,000 as compared to 21,073 as of June 30, 2020.

Balance Sheet: At September 30, 2020, Exela’s total net debt was $1.477 billion.

Debt Reduction and Liquidity Improvement
On November 12, 2019, Exela announced that its Board of Directors adopted a debt reduction and liquidity improvement initiative (“Initiative”), with the goal of increasing the Company’s liquidity to approximately $125.0 to $150.0 million, and repaying debt with a target debt reduction of approximately $150.0 to $200.0 million. In accordance with this Initiative, Exela has announced three transactions year-to-date 2020.

• On January 15, 2020, Exela announced that the Company entered into a 5-year, $160.0 million accounts receivable securitization facility to improve liquidity. The facility is for an initial five-year term, may be extended in accordance with its terms, and is incremental to Exela’s existing $100.0 million revolving facility maturing in July 2022.
• On March 17, 2020, Exela announced the sale of its Tax Benefit Group (“TBG”) business for $40.0 million, or approximately 1.93x 2019 revenue. Net of closing costs and adjustments, this transaction resulted in proceeds of $38.2 million. For full year 2019, TBG generated total revenue of $20.7 million.
• On July 23, 2020, Exela announced the sale of its physical records storage and logistics business for $12.3 million. The assets involved in the business generated approximately $1.0 million of EBITDA in 2019.
• The Company believes it is on schedule for additional divestitures with expected proceeds in the range of $100.0 million to $150.0 million in the aggregate.

Fourth Quarter and Full Year 2020 Revenue Outlook

• For the fourth quarter of 2020, Exela currently expects revenue to be in the range of $300 million to $310 million.
• For full year 2020, Exela currently expects revenue to be in the range of $1.28 billion to $1.29 billion.

(1) – Constant currency is a non-GAAP measure. A reconciliation of constant currency is attached to this release.
(2) – EBITDA is a non-GAAP measure. A reconciliation of EBITDA is attached to this release.
(3) – Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.
(4) – Pass through revenue is defined as postage and postage handling revenue with either zero or nominal margins. LMCE is defined as revenue from the low margin contract exit announced in the third quarter of 2018. A reconciliation of revenue net of pass through revenue and LMCE is attached to this release.

About Exela

Exela Technologies, Inc. is a business process automation leader, leveraging a global footprint and proprietary technology to provide digital transformation solutions enhancing quality, productivity, and end-user experience. With decades of expertise operating mission-critical processes, Exela serves a growing roster of more than 4,000 customers throughout 50 countries, including over 60% of the Fortune^® 100. With foundational technologies spanning information management, workflow automation, and integrated communications, Exela’s software and services include multi-industry department solution suites addressing finance and accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and public sectors. Through cloud-enabled platforms, built on a configurable stack of automation modules, and over 21,000 employees operating in 23 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner.

Find out more at www.exelatech.com