PRESS RELEASE
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WNS Announces Third Quarter Fiscal 2012 Earnings
Highlights:
GAAP Financials1
-
Q3 revenue of
$117.2 million , down 23.2% from the corresponding quarter last year (primarily due to change in accounting for repair payments)2 and flat sequentially -
Q3 profit of
$4.0 million , compared to profit of$9.0 million in the corresponding quarter last year and profit of$3.4 million sequentially -
Q3 diluted earnings per ADS of
$0.09 , compared to diluted earnings per ADS of$0.20 in the corresponding quarter last year and diluted earnings per ADS of$0.08 sequentially
Non-GAAP Financial Measures*
-
Q3 revenue less repair payments3 of
$97.2 million , up 4.9% from the corresponding quarter last year and down 3.0% sequentially -
Q3 ANI4 of
$12.1 million , compared to$18.0 million in the corresponding quarter last year and$12.0 million sequentially
-
Q3 adjusted diluted net income per ADS of
$0.27 , compared to$0.40 in the corresponding quarter last year and$0.26 sequentially
Operations Update
- Added 3 new clients in the quarter, expanded 9 existing relationships
- Days sales outstanding (DSO) at 36 days
-
Global headcount of 22,697 as of
December 31, 2011
1 GAAP refers to International Financial Reporting Standards
(IFRS) as issued by
2 Refer to the press release dated
3 Payments to repair centers, and therefore a difference between revenue and revenue less repair payments, only applies to the Auto Claims business. For all other businesses, revenue less repair payments is the same as revenue.
4 Profit under IFRS excluding amortization of intangible assets and share-based compensation expense.
*These are non-GAAP financial measures. Reconciliation of non-GAAP financial measures to GAAP operating results are included at the end of this release. See also “About Non-GAAP Financial Measures” below.
“During the third quarter, WNS continued to make progress on our key
investment programs designed to enhance our competitive positioning and
long-term revenue growth potential,” said
As anticipated, revenue less repair payments reduced sequentially during the third quarter as a result of the depreciation in the British pound versus the US dollar and the impact of seasonal volume reductions in our Travel vertical. While unfavorable exchange rates created revenue headwinds, depreciation in the Indian rupee versus the US dollar favorably impacted operating costs and allowed WNS to expand margins during the quarter.
In the past quarter, the uncertain and volatile macroeconomic outlook has resulted in near-term behavior changes for some WNS clients and prospects. While some clients are viewing this environment as an opportunity to engage and accelerate cost reduction initiatives, other clients have experienced business challenges and strategic changes which are impacting volumes with WNS. Most of our client’s calendar 2012 budgets are expected to be finalized in the next month, which should provide additional clarity with respect to strategic plans and business volumes for fiscal 2013. The company remains focused on our key investment programs and strategic initiatives, and we believe that WNS is well positioned to drive long-term, sustainable value for all of our key stakeholders."
Fiscal Third Quarter 2012 Financial Results
All discussions below refer to non-GAAP financial measures. The
financial information in this release is focused on non-GAAP financial
measures as we believe that this is a true representation of our
operating performance. Reconciliations of these non-GAAP financial
measures to our GAAP operating results are included at the end of this
release. See also “About Non-GAAP Financial Measures” below. A
discussion of our GAAP measures will be contained in our Management’s
Discussion and Analysis of Financial Condition and Results of Operations
accompanying our third fiscal quarter 2012 financial statements to be
submitted to the
Revenue less repair payments for the fiscal third quarter 2012 increased
4.9 percent to
Adjusted gross profit excluding share based compensation expense, as a percentage of revenue less repair payments, was 36.3 percent in the fiscal third quarter 2012, compared to 34.3 percent in the prior fiscal year period, and 32.8 percent sequentially. The increase in adjusted gross profit compared to the prior year period was primarily due to higher revenue and a weaker Indian Rupee. The sequential improvement was primarily due to the impact of currency, as the Indian rupee depreciated versus the US dollar during the third quarter.
Adjusted selling and marketing (S&M) expenses excluding share based compensation expense, as a percentage of revenue less repair payments, was 6.6 percent in the fiscal third quarter 2012, compared to 6.5 percent in the prior fiscal year period and 6.9 percent last quarter. The sequential reduction was primarily the result of currency favorability. WNS anticipates maintaining a consistent level of investment on a percentage basis in support of its growth strategies.
Adjusted general and administrative (G&A) expenses excluding share based compensation expense, as a percentage of revenue less repair payments was 12.0 percent in the fiscal third quarter 2012, compared to 14.2 percent in the prior fiscal year period and 12.3 percent sequentially. The decrease compared to the prior fiscal year was primarily the result of rupee depreciation, cost optimization in support functions and better operating leverage. Sequential improvement was largely the result of currency favorability.
Adjusted operating profit excluding amortization of intangible assets and share based compensation, as a percentage of revenue less repair payments, was 16.7 percent in the fiscal third quarter 2012, compared to 20.2 percent in the prior fiscal year period and 15.4 percent sequentially.
Adjusted net income (ANI) for the fiscal third quarter 2012 was
From a balance sheet perspective, WNS ended the fiscal third quarter
with
Fiscal 2012 Guidance
WNS updates its guidance for the fiscal year ending
-
Revenue less repair payments is expected to be between
$391 million and $393 million . This assumes an average GBP to USD exchange rate of 1.55 for the fiscal fourth quarter of 2012. -
Adjusted net income is expected to range between
$45 million and $47 million . This assumes an average USD to INR exchange rate of 52.0 for the fiscal fourth quarter of 2012.
“We have narrowed our fiscal 2012 guidance range based on current
revenue visibility levels and exchange rates. The company remains
focused on our key investment initiatives and on improving our overall
financial strength and competitive positioning,” said
Conference Call
WNS will host a
conference call on
To participate in the call, please use
the following details: +1-800-659-2037; international dial-in
+1-617-614-2713; participant passcode 27043617. A replay will be
available for one week following the call at +1-888-286-8010;
international dial-in +1-617-801-6888; passcode 64158783, as well as on
the WNS website, www.wns.com,
beginning two hours after the end of the call.
About WNS
About Non-GAAP Financial Measures
For
financial statement reporting purposes, WNS has two reportable segments:
WNS Global BPO and WNS Auto Claims BPO. In the auto claims segment,
which includes
Revenue less repair payments is a non-GAAP measure which is calculated as revenue less payments to repair centers. In order to provide accident-management services, WNS arranges for the repair through a network of repair centers. Repair costs are invoiced to customers. Amounts invoiced to customers for repair costs paid to the automobile repair centers are recognized as revenue. WNS uses revenue less repair payments for “fault” repairs as a primary measure to allocate resources and measure segment performance. For “non fault repairs,” revenue including repair payments is used as a primary measure. As WNS provides a consolidated suite of accident management services including credit hire and credit repair for its “Non fault” repairs business, WNS believes that measurement of that line of business has to be on a basis that includes repair payments in revenue.
WNS believes that the presentation of this non-GAAP measure in the segmental information provides useful information for investors regarding the segment’s financial performance. The presentation of this non-GAAP information is not meant to be considered in isolation or as a substitute for WNS’s financial results prepared in accordance with IFRS.
WNS presents Adjusted Net Income (ANI) and the other non-GAAP measures included in this release as supplemental measures of its performance. WNS presents these non-GAAP measures because it believes they assist investors in comparing its performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance. In addition, it uses these non-GAAP measures (i) as a factor in evaluating management’s performance when determining incentive compensation and (ii) to evaluate the effectiveness of its business strategies.
Safe Harbor Statement under the provisions of the United States Private Securities Litigation Reform Act of 1995
This release contains forward-looking statements, as defined in the safe
harbor provisions of the US Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on our current
expectations, assumptions, estimates and projections about our Company
and our industry. The forward-looking statements are subject to various
risks and uncertainties. Generally, these forward-looking statements can
be identified by the use of forward-looking terminology such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,”
“project,” “seek,” “should” and similar expressions. Those statements
include, among other things, the discussions of our business strategy,
industry growth potential, expansion opportunities, expectations
concerning our future financial performance and growth potential,
including our fiscal 2012 guidance and future profitability, relevant
foreign currency exchange rates, our future operations, potential
benefits from our investments in our sales function, our deal pipeline
and the impact of the adoption of IFRS on our financial position and
performance (including the impact of the proposed amendment to the IFRS
accounting standard on hedge accounting). We caution you that reliance
on any forward-looking statement involves risks and uncertainties, and
that although we believe that the assumptions on which our
forward-looking statements are based are reasonable, any of those
assumptions could prove to be inaccurate, and, as a result, the
forward-looking statements based on those assumptions could be
materially incorrect. These factors include but are not limited to
worldwide economic and business conditions; political or economic
instability in the jurisdictions where we have operations; regulatory,
legislative and judicial developments; our ability to attract and retain
clients; technological innovation; telecommunications or technology
disruptions; future regulatory actions and conditions in our operating
areas; our dependence on a limited number of clients in a limited number
of industries; our ability to expand our business or effectively manage
growth; our ability to hire and retain enough sufficiently trained
employees to support our operations; negative public reaction in the US
or the
References to “$” and “USD” refer to
Growth of revenue (GAAP) and revenue less repair payments (non-GAAP) |
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(US dollars in millions) | (% growth) | |||||||||||||||||||||||||
Revenue (GAAP) | $ | 117.2 | $ | 152.7 | $ | 117.9 |
|
(23.2 | )% | (0.6 | )% | |||||||||||||||
Less: Payments to repair centers | 20.0 | 60.0 | 17.7 | (66.6 | )% | 13.1 | % | |||||||||||||||||||
Revenue less repair payments (Non-GAAP) | $ | 97.2 | $ | 92.7 | $ | 100.2 | 4.9 | % | (3.0 | )% | ||||||||||||||||
Reconciliation of cost of revenue (GAAP to non-GAAP) |
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(US dollars in millions) | |||||||||||
Cost of revenue (GAAP) | $ | 82.1 | $ | 121.1 | $ | 85.2 | |||||
Less: Payments to repair centers | 20.0 | 60.0 | 17.7 | ||||||||
Less: Share-based compensation expense | 0.2 | 0.2 | 0.2 | ||||||||
Adjusted cost of revenue (excluding payment to repair centers and share-based compensation expense) (Non-GAAP) | $ | 61.9 | $ | 60.9 | $ | 67.3 | |||||
Reconciliation of gross profit (GAAP to non-GAAP) |
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(US dollars in millions) | ||||||||||||
Gross profit (GAAP) | $ | 35.1 | $ | 31.6 | $ | 32.7 | ||||||
Add: Share-based compensation expense | 0.2 | 0.2 | 0.2 | |||||||||
Adjusted gross profit (excluding share-based compensation expense) (Non-GAAP) | $ | 35.3 | $ | 31.8 | $ | 32.9 | ||||||
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Gross profit as a percentage of revenue (GAAP) | 30.0 | % | 20.7 | % | 27.7 | % | ||||||
Adjusted gross profit (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 36.3 | % | 34.3 | % | 32.8 | % | ||||||
Reconciliation of selling and marketing expenses (GAAP to non-GAAP) |
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(US dollars in millions) | |||||||||||||
Selling and marketing expenses (GAAP) | $ | 6.4 | $ | 6.1 | $ | 7.0 | |||||||
Less: Share-based compensation expense | 0.0 | 0.1 | 0.1 | ||||||||||
Adjusted selling and marketing expenses (excluding share-based compensation expense) (Non-GAAP) | $ | 6.4 | $ | 6.1 | $ | 6.9 | |||||||
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Selling and marketing expenses as a percentage of revenue (GAAP) | 5.5 | % | 4.0 | % | 5.9 | % | |||||||
Adjusted selling and marketing expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 6.6 | % | 6.5 | % | 6.9 | % | |||||||
Reconciliation of general and administrative expenses (GAAP to non-GAAP) |
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(US dollars in millions) | |||||||||||||||
General and administrative expenses (GAAP) | $ | 12.5 | $ | 14.0 | $ | 13.1 | |||||||||
Less: Share-based compensation expense | 0.9 | 0.8 | 0.8 | ||||||||||||
Adjusted general and administrative expenses (excluding share-based compensation expense) (Non-GAAP) | $ | 11.7 | $ | 13.2 | $ | 12.3 | |||||||||
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General and administrative expenses as a percentage of revenue (GAAP) | 10.7 | % | 9.2 | % | 11.1 | % | |||||||||
Adjusted general and administrative expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 12.0 | % | 14.2 | % | 12.3 | % | |||||||||
Reconciliation of operating profit (GAAP to non-GAAP) |
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(US dollars in millions) | ||||||||||||||
Operating profit (GAAP) | $ | 8.1 | $ | 9.6 | $ | 6.9 | ||||||||
Add: Amortization of intangible assets | 7.0 | 8.0 | $ | 7.5 | ||||||||||
Add: Share-based compensation expense | 1.1 | 1.1 | 1.1 | |||||||||||
Adjusted operating profit (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 16.2 | $ | 18.7 | $ | 15.5 | ||||||||
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Operating profit as a percentage of revenue (GAAP) | 6.9 | % | 6.3 | % | 5.8 | % | ||||||||
Adjusted operating profit (excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 16.7 | % | 20.2 | % | 15.4 | % | ||||||||
Reconciliation of profit (GAAP to non-GAAP) |
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(US dollars in millions) | ||||||||||||
Profit (GAAP) | $ | 4.0 | $ | 9.0 | $ | 3.4 | ||||||
Add: Amortization of intangible assets | 7.0 | 8.0 | $ | 7.5 | ||||||||
Add: Share-based compensation expense | 1.1 | 1.1 | 1.1 | |||||||||
Adjusted net income (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | 12.1 | 18.0 | 12.0 | |||||||||
Add: Adjustment for impact of hedge accounting | 0.5 | (2.1 | ) | 0.0 | ||||||||
Adjusted net income (further excluding the impact of hedge accounting) (Non-GAAP) | $ | 12.6 | $ | 15.9 | $ | 12.0 | ||||||
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Profit as a percentage of revenue (GAAP) | 3.5 | % | 5.9 | % | 2.9 | % | |||||||
Adjusted net income (excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 12.5 | % | 19.4 | % | 12.0 | % | |||||||
Reconciliation of basic income per ADS (GAAP to non-GAAP) |
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Basic earnings per ADS (GAAP) | $ | 0.09 | $ | 0.20 | $ | 0.08 | |||||
Add: Adjustments for amortization of intangible assets and share-based compensation expense | 0.18 | 0.21 | 0.19 | ||||||||
Adjusted basic net income per ADS (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 0.27 | $ | 0.41 | $ | 0.27 | |||||
Reconciliation of diluted income per ADS (GAAP to non-GAAP) |
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Diluted earnings per ADS (GAAP) | $ | 0.09 | $ | 0.20 | $ | 0.08 | |||||
Add: Adjustments for amortization of intangible assets and share-based compensation expense. | 0.18 | 0.20 | 0.18 | ||||||||
Adjusted diluted net income per ADS (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | 0.27 | 0.40 | 0.26 | ||||||||
Add: Adjustment for impact of hedge accounting | 0.01 | (0.05) | 0.00 | ||||||||
Adjusted diluted net income per ADS (further excluding the impact of hedge accounting) (Non-GAAP) | $ | 0.28 | $ | 0.35 | $ | 0.26 |
Source:
WNS (Holdings) Limited
Investors:
David
Mackey
Sr. Vice President – Finance & Head of Investor Relations
+1
248 630 5197
ir@wns.com
or
Media:
Sumi
Gupta
Public Relations
+91 (22) 4095 2263
sumi.gupta@wns.com
pr@wns.com