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Exela Technologies Holdings, Inc. Reports Full Year 2023 Results

Exela Technologies, Inc.
Exela Technologies, Inc.
  • 2023 revenue of $1,064.1 million, down 1.2% year-over-year

  • Gross margin of 21.7% in 2023 vs 18.5% in 2022

  • Operating profit of $8.1 million, up $236.8 million due to increased gross margin, lower SG&A and no impairments in 2023 versus 2022

  • Net loss of $124.4 million ($125.1 attributable to Exela Technologies Inc), an improvement of $291.4 million year-over-year

  • Certain of the Company’s subsidiaries issued approximately $764.8 million of aggregate principal amount of new notes in exchange for $956.0 million of aggregate principal amount of existing 2026 notes in 2023

IRVING, Texas, April 04, 2024 (GLOBE NEWSWIRE) -- Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA, XELAP), a global business process automation (“BPA”) leader, announced today its financial results for the full year ended December 31, 2023.

“2023 was a challenging year with focus on stabilizing revenues and recovering from the effects of our network outage in 2022. We made significant improvement to our balance sheet, eliminating current liabilities, and reducing our overall debt and interest expense under a difficult macro environment and uncertain outlook. We maintained our focus on cost management and leveraging automation, and have 2023 initiatives in process continuing into 2024 to achieve our margin improvement goals. Late in the year, we made investments to position the Company for future growth by entering into cyber security, data modernization, cloud and Infrastructure-as-a-Service, in addition to previously announced investments in FAO and data science. We completed the public listing on Nasdaq of XBP Europe, our European business. We also made significant investments in people. We improved gross margins and operating income, however we did not accomplish all of our goals in 2023 and have room to grow,” said Par Chadha, Executive Chairman of Exela Technologies.

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Full Year Highlights

  • Revenue: Revenue for 2023 was $1,064.1 million, a decline of 1.2% compared to $1,077.2 million in 2022

    • Revenue for the Information and Transaction Processing Solutions segment was $732.3 million, a decline of 4.3% year-over-year

    • Healthcare Solutions generated $251.4 million, a 5.0% increase year-over-year

    • Legal and Loss Prevention Services generated $80.4 million in revenue, a 10.6% increase year-over-year

  • Operating profit: Operating profit in 2023 was $8.0 million, up $236.8 million compared with an operating loss of $228.8 million in 2022. Higher gross margin from technology advancements, lower SG&A with reductions in professional services and facility expenses, and a lack of goodwill impairment contributed to the profit improvement on a year-over-year basis.

  • Net Loss: Net loss for 2023 was $124.4 million ($125.1 attributable to Exela Technologies Inc), an improvement of $291.4 million compared with a net loss of $415.6 million in 2022. The year over year decrease was materially driven by improvements in operating profit, lower interest expense and a gain on debt modification and extinguishment costs relative 2022.

  • Adjusted EBITDA(1): Adjusted EBITDA for 2023 was $60.0 million compared to $56.8 million in 2022. Adjusted EBITDA margin for 2023 was 5.6%, an increase of 30 basis points from 2022.

  • Capital Expenditures: Capital expenditures for 2023 were 1.1% of revenue compared to 2% of revenue in 2022 as we continue to migrate from capital intensive infrastructure to cloud computing, by making investments in our platforms and operations.

Below is the note referenced above:
(1) Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.

About Exela
Exela Technologies is a business process automation (BPA) leader, leveraging a global footprint and proprietary technology to provide digital transformation solutions enhancing quality, productivity, and end-user experience. With decades of experience 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. Utilizing foundational technologies spanning information management, workflow automation, and integrated communications, Exela’s software and services include multi-industry, departmental solution suites addressing finance and accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and the public sector. Through cloud-enabled platforms, built on a configurable stack of automation modules, and approximately 14,100 employees operating in 20 countries, Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner.

To automatically receive Exela financial news by e-mail, please visit the Exela Investor Relations website, http://investors.exelatech.com/, and subscribe to E-mail Alerts.

Forward-Looking Statements
Certain statements included in this press release are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “may”, “should”, “would”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “seem”, “seek”, “continue”, “future”, “will”, “expect”, “outlook” or other similar words, phrases or expressions. These forward-looking statements include statements regarding our industry, future events, estimated or anticipated future results and benefits, future opportunities for Exela, and other statements that are not historical facts. These statements are based on the current expectations of Exela management and are not predictions of actual performance. These statements are subject to a number of risks and uncertainties, including without limitation the network outage described in this press release and those discussed under the heading “Risk Factors” in our Annual Report and in subsequent filings with the U.S. Securities and Exchange Commission (“SEC”). In addition, forward-looking statements provide Exela’s expectations, plans or forecasts of future events and views as of the date of this communication. Exela anticipates that subsequent events and developments will cause Exela’s assessments to change. These forward-looking statements should not be relied upon as representing Exela’s assessments as of any date subsequent to the date of this press release.

For more Exela news, commentary, and industry perspectives, visit:
Website: https://investors.exelatech.com/
X: @ExelaTech
LinkedIn: /exela-technologies
Facebook: @exelatechnologies
Instagram: @exelatechnologies
The information posted on the Company's website and/or via its social media accounts may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website and its social media accounts in addition to the Company's press releases, SEC filings and public conference calls and webcasts.

Investor and/or Media Contacts:
Vincent Kondaveeti

E: vincent.kondaveeti@exelatech.com

Exela Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2023 and 2022
(in thousands of United States dollars except share and per share amounts)

 

 

 

 

 

December 31, 

 

2023

 

2022

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

23,341

 

 

$

15,073

 

Restricted cash

 

43,812

 

 

 

29,994

 

Accounts receivable, net of allowance for credit losses of $6,628 and $6,402, respectively

 

76,893

 

 

 

101,616

 

Related party receivables and prepaid expenses

 

296

 

 

 

759

 

Inventories, net

 

11,502

 

 

 

16,848

 

Prepaid expenses and other current assets

 

25,364

 

 

 

26,206

 

Total current assets

 

181,208

 

 

 

190,496

 

Property, plant and equipment, net of accumulated depreciation of $213,142 and $207,520, respectively

 

58,366

 

 

 

71,694

 

Operating lease right-of-use assets, net

 

33,874

 

 

 

40,734

 

Goodwill

 

170,452

 

 

 

186,802

 

Intangible assets, net

 

164,920

 

 

 

200,982

 

Deferred income tax assets

 

3,043

 

 

 

1,483

 

Other noncurrent assets

 

24,474

 

 

 

29,721

 

Total assets

$

636,337

 

 

$

721,912

 

 

 

 

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

Current portion of long-term debt

$

30,029

 

 

$

154,802

 

Accounts payable

 

61,109

 

 

 

79,249

 

Related party payables

 

1,938

 

 

 

2,473

 

Income tax payable

 

2,080

 

 

 

2,045

 

Accrued liabilities

 

63,699

 

 

 

61,340

 

Accrued compensation and benefits

 

65,012

 

 

 

54,143

 

Accrued interest

 

52,389

 

 

 

60,901

 

Customer deposits

 

23,838

 

 

 

16,955

 

Deferred revenue

 

12,099

 

 

 

16,405

 

Obligation for claim payment

 

66,988

 

 

 

44,380

 

Current portion of finance lease liabilities

 

4,856

 

 

 

5,485

 

Current portion of operating lease liabilities

 

10,845

 

 

 

11,867

 

Total current liabilities

 

394,882

 

 

 

510,045

 

Long-term debt, net of current maturities

 

1,030,580

 

 

 

942,035

 

Finance lease liabilities, net of current portion

 

5,953

 

 

 

9,448

 

Pension liabilities, net

 

13,192

 

 

 

16,917

 

Deferred income tax liabilities

 

11,692

 

 

 

11,180

 

Long-term income tax liabilities

 

6,359

 

 

 

2,742

 

Operating lease liabilities, net of current portion

 

26,703

 

 

 

31,030

 

Other long-term liabilities

 

5,811

 

 

 

6,104

 

Total liabilities

 

1,495,172

 

 

 

1,529,501

 

Commitments and Contingencies (Note 14)

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

Common Stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 6,365,353 shares issued and outstanding at December 31, 2023 and 1,393,889 shares issued and 1,393,276 shares outstanding at December 31, 2022

 

261

 

 

 

162

 

Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized at December 31, 2023 and December 31, 2022, respectively

 

 

 

 

 

Series A Preferred Stock, 2,778,111 shares issued and outstanding at December 31, 2023 and December 31, 2022

 

1

 

 

 

1

 

Series B Preferred Stock, 3,029,900 shares issued and outstanding at December 31, 2023 and 0 shares issued and outstanding at December 31, 2022

 

 

 

 

 

Additional paid in capital

 

1,179,098

 

 

 

1,102,619

 

Less: Common Stock held in treasury, at cost; 0 shares at December 31, 2023 and 612 shares at December 31, 2022

 

 

 

 

(10,949

)

Equity-based compensation

 

57,073

 

 

 

56,958

 

Accumulated deficit

 

(2,084,114

)

 

 

(1,948,009

)

Accumulated other comprehensive loss:

 

 

 

 

 

Foreign currency translation adjustment

 

(7,648

)

 

 

(4,788

)

Unrealized pension actuarial losses, net of tax

 

(174

)

 

 

(3,583

)

Total accumulated other comprehensive loss

 

(7,822

)

 

 

(8,371

)

Total stockholders’ deficit attributable to Exela Technologies, Inc.

 

(855,503

)

 

 

(807,589

)

Noncontrolling interest in XBP Europe

 

(3,332

)

 

 

 

Total stockholders’ deficit

 

(858,835

)

 

 

(807,589

)

Total liabilities and stockholders’ deficit

$

636,337

 

 

$

721,912

 

The accompanying notes are an integral part of these consolidated financial statements.

Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
For the years ended December 31, 2023 and 2022
(in thousands of United States dollars except share and per share amounts)

 

 

 

 

 

 

 

Years ended December 31, 

 

2023

 

2022

Revenue

$

1,064,124

 

 

$

1,077,157

 

Cost of revenue (exclusive of depreciation and amortization)

 

833,422

 

 

 

877,474

 

Selling, general and administrative expenses (exclusive of depreciation and amortization)

 

150,672

 

 

 

176,524

 

Depreciation and amortization

 

60,535

 

 

 

71,831

 

Impairment of goodwill and other intangible assets

 

 

 

 

171,182

 

Related party expense

 

11,444

 

 

 

8,923

 

Operating profit (loss)

 

8,051

 

 

 

(228,777

)

Other expense (income), net:

 

 

 

 

 

Interest expense, net

 

139,656

 

 

 

164,870

 

Debt modification and extinguishment costs (gain), net

 

(16,129

)

 

 

4,522

 

Sundry expense (income), net

 

973

 

 

 

(957

)

Other expense (income), net

 

(884

)

 

 

14,170

 

Loss before income taxes

 

(115,565

)

 

 

(411,382

)

Income tax expense

 

(8,868

)

 

 

(4,199

)

Net loss

 

(124,433

)

 

 

(415,581

)

Net profit (loss) attributable to noncontrolling interest in XBP Europe, net of taxes

 

723

 

 

 

 

Net loss attributable to Exela Technologies, Inc.

$

(125,156

)

 

$

(415,581

)

Cumulative dividends for Series A Preferred Stock

 

(3,961

)

 

 

(3,588

)

Cumulative dividends for Series B Preferred Stock

 

(4,718

)

 

 

(3,665

)

Net loss attributable to common stockholders

$

(133,835

)

 

$

(422,834

)

Loss per share:

 

 

 

 

 

Basic and diluted

$

(22.37

)

 

$

(1,372.98

)

The accompanying notes are an integral part of these consolidated financial statements.

Exela Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2023 and 2022
(in thousands of United States dollars unless otherwise stated)

 

 

 

 

 

 

 

Years ended December 31, 

 

2023

 

2022

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(124,433

)

 

$

(415,581

)

Adjustments to reconcile net loss

 

 

 

 

 

Depreciation and amortization

 

60,535

 

 

 

71,831

 

Original issue discount, debt premium and debt issuance cost amortization

 

5,411

 

 

 

15,261

 

Interest paid on BR Exar AR Facility

 

(10,754

)

 

 

 

Debt modification and extinguishment gain, net

 

(17,534

)

 

 

(1,803

)

Impairment of goodwill and other intangible assets

 

 

 

 

171,182

 

Impairment of operating lease right-of-use assets

 

1,942

 

 

 

 

Credit loss expense

 

4,486

 

 

 

1,573

 

Deferred income tax provision

 

(1,048

)

 

 

147

 

Share-based compensation expense

 

115

 

 

 

970

 

Unrealized foreign currency gain

 

(70

)

 

 

(1,288

)

(Gain) loss on sale of assets

 

(7,044

)

 

 

707

 

Fair value adjustment for private warrants liability of XBP Europe

 

597

 

 

 

 

Change in operating assets and liabilities

 

 

 

 

 

Accounts receivable

 

22,729

 

 

 

77,650

 

Prepaid expenses and other current assets

 

5,523

 

 

 

(7,813

)

Accounts payable and accrued liabilities

 

63,711

 

 

 

(520

)

Related party payables

 

(71

)

 

 

945

 

Additions to outsource contract costs

 

(539

)

 

 

(423

)

Net cash provided by (used in) operating activities

 

3,556

 

 

 

(87,162

)

Cash flows from investing activities

 

 

 

 

 

Purchase of property, plant and equipment

 

(8,075

)

 

 

(18,299

)

Additions to patents

 

 

 

 

(15

)

Additions to internally developed software

 

(3,818

)

 

 

(3,650

)

Proceeds from sale of assets

 

29,811

 

 

 

194

 

Net cash provided by (used in) investing activities

 

17,918

 

 

 

(21,770

)

Cash flows from financing activities

 

 

 

 

 

Proceeds from issuance of Common Stock from private placement

 

 

 

 

55

 

Proceeds from issuance of Common Stock from at the market offerings

 

69,260

 

 

 

276,337

 

Cash received in exchange for the issuance of noncontrolling interest shares in XBP Europe

 

5,205

 

 

 

 

Cash paid for equity issuance costs from at the market offerings

 

(2,232

)

 

 

(9,482

)

Dividend paid on Series B Preferred Stock

 

 

 

 

(2,532

)

Payment for fractional shares on reverse stock split

 

(31

)

 

 

 

Repurchases of Common Stock for retirement

 

 

 

 

(487

)

Borrowings under factoring arrangement and Securitization Facility

 

88,396

 

 

 

123,353

 

Principal repayment on borrowings under factoring arrangement and Securitization Facility

 

(92,536

)

 

 

(216,812

)

Cash paid for withholding taxes on vested RSUs

 

 

 

 

(135

)

Lease terminations

 

 

 

 

3

 

Cash paid for debt issuance costs

 

(8,496

)

 

 

(7,125

)

Principal payments on finance lease obligations

 

(4,570

)

 

 

(5,523

)

Borrowings from senior secured revolving facility and BRCC revolver

 

9,600

 

 

 

20,000

 

Repayments on senior secured revolving facility

 

 

 

 

(49,477

)

Proceeds from issuance of July 2026 Notes

 

 

 

 

70,269

 

Borrowings from other loans

 

8,709

 

 

 

10,095

 

Cash paid for debt repurchases

 

(11,858

)

 

 

(4,712

)

Proceeds from Senior secured term loan

 

40,000

 

 

 

 

Proceeds from Second Lien Note

 

31,500

 

 

 

 

Borrowing under BR Exar AR Facility

 

42,539

 

 

 

 

Repayments under BR Exar AR Facility

 

(42,546

)

 

 

 

Repayment of BRCC term loan

 

(48,529

)

 

 

(66,471

)

Principal repayments on senior secured term loans and other loans

 

(83,787

)

 

 

(30,717

)

Net cash provided by financing activities

 

624

 

 

 

106,639

 

Effect of exchange rates on cash, restricted cash and cash equivalents

 

(12

)

 

 

(700

)

Net increase (decrease) in cash, restricted cash and cash equivalents

 

22,086

 

 

 

(2,993

)

Cash, restricted cash, and cash equivalents

 

 

 

 

 

Beginning of period

 

45,067

 

 

 

48,060

 

End of period

$

67,153

 

 

$

45,067

 

Supplemental cash flow data:

 

 

 

 

 

Income tax payments, net of refunds received

$

5,494

 

 

$

5,790

 

Interest paid

 

111,835

 

 

 

98,602

 

Noncash investing and financing activities:

 

 

 

 

 

Assets acquired through right-of-use arrangements

$

405

 

 

$

4,790

 

Issuance of April 2026 Notes in exchange of July 2026 Notes

 

764,800

 

 

 

 

Issuance of April 2026 Notes in exchange of 2023 term loan

 

2,963

 

 

 

 

Accrued PIK interest paid through issuance of PIK Notes

 

44,146

 

 

 

 

Common Stock exchanged for Series B Preferred Stock

 

 

 

 

6

 

Accrued liability for true-up obligation settled through the issuance of July 2026 Notes

 

 

 

 

10,351

 

Accrued capital expenditures

 

2,261

 

 

 

1,851

 

The accompanying notes are an integral part of these consolidated financial statements.

Exela Technologies, Inc. and Subsidiaries
Schedule 1: Reconciliation of Adjusted EBITDA and constant currency revenues

 

 

 

 

 

 

 

Year Ended December 31, 

 

2023

 

2022

Net Loss

$

(124,433

)

 

$

(415,581

)

Taxes

 

8,868

 

 

 

4,199

 

Interest expense

 

139,656

 

 

 

164,870

 

Depreciation and amortization

 

60,535

 

 

 

71,831

 

EBITDA

 

84,626

 

 

 

(174,681

)

Transaction and integration costs (1)

 

6,172

 

 

 

18,586

 

Non-cash equity compensation (2)

 

115

 

 

 

985

 

Other charges including non-cash (3)

 

(12,991

)

 

 

35,932

 

Loss/(gain) on sale of assets (4)

 

1,105

 

 

 

1,357

 

Loss/(gain) on business disposals (5)

 

(7,223

)

 

 

 

Debt modification and extinguishment costs (gain), net

 

(16,129

)

 

 

4,522

 

Loss/(gain) on derivative instruments

 

 

 

 

(1,091

)

Exit costs related to China operations

 

1,850

 

 

 

 

XBP Europe related de-SPAC costs

 

2,478

 

 

 

 

Impairment of goodwill, other intangible assets

 

 

 

 

171,182

 

Adjusted EBITDA

$

60,003

 

 

$

56,792

 

(1) Represents non-recurring legal, consulting and other fees and expenses incurred in connection with acquisitions, dispositions, debt-exchanges and other extraordinary transactions and events during the applicable period.
(2) Represents the non-cash charges related to restricted stock units and options.
(3) Represents fair value adjustments to our true-up guarantee obligation under the Revolver Exchange (as defined below), network outage related costs and related insurance recoveries, legal settlement costs for class action.
(4) Represents a loss/(gain) recognized on the disposal of property, plant, and equipment and other assets.
(5) Represents a loss/(gain) recognized on the sale of high-speed scanner business in the second quarter of 2023.

Source: Exela Technologies, Inc.