PRESS RELEASE
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WNS Announces Second Quarter Fiscal 2013 Earnings
Highlights:
GAAP Financials
-
Revenue of
$113.1 million , down 4.1% from$117.9 million in Q2 of last year (primarily due to reduced pass-through expenses in the Auto Claims business†) and up 4.9% from$107.8 million last quarter -
Profit of
$4.3 million , compared to$3.4 million in Q2 of last year and$2.8 million last quarter -
Diluted earnings per ADS of
$0.08 , compared to$0.08 in Q2 of last year and$0.06 last quarter
Non-GAAP Financial Measures*
-
Revenue less repair payments of
$107.3 million , up 7.1% from$100.2 million in Q2 of last year and up 4.5% from$102.6 million last quarter -
Adjusted Net Income (ANI) of
$12.2 million , compared to$12.0 million in Q2 of last year and$11.1 million last quarter -
Adjusted diluted earnings per ADS of
$0.24 , compared to$0.26 in Q2 of last year and$0.22 last quarter
Operations Update
-
Added new delivery locations in Gdynia,
Poland and Vizag,India - Added 3 new clients in the quarter, expanded 11 existing relationships
- Days sales outstanding (DSO) at 38 days
-
Global headcount of 25,714 as of
September 30, 2012
Reconciliations of the non-GAAP financial measures discussed below to our GAAP operating results are included at the end of this release. See also “About Non-GAAP Financial Measures.”
Revenue less repair payments* of
Adjusted gross margin* for the quarter was 35.5%, as compared to the 32.8% in Q2 of last year, and 33.9% reported last quarter. On a year-over-year basis, gross margin favorability was driven by higher revenue and rupee depreciation, which was partially offset by wage increases and higher infrastructure costs. Sequentially, gross margins improved as a result of depreciation in the Indian rupee and productivity improvements. Partially offsetting this favorability were investments in infrastructure including two new delivery locations and additional capacity in three existing locations. Second quarter adjusted operating margin* was 13.7%, as compared to 15.4% in Q2 of last year and 13.2% reported in the first quarter. Year-over-year, the reduction in adjusted operating margin* is the result of wage increases, infrastructure expansion and the impact of the Fusion acquisition. Currency favorability and operating leverage associated with higher revenue partially offset these costs. Sequentially, improvements associated with currency and productivity were largely offset by investments in infrastructure and integration costs associated with the Fusion acquisition.
Adjusted net income (ANI)* in the second quarter was
From a balance sheet perspective, WNS ended the fiscal second quarter
with
“While the overall demand environment for BPO services remains stable
and healthy, decision cycles for larger and more transformational
projects have been experiencing some temporary delays. Despite these
timing issues, WNS continues to make progress towards our longer-term
financial and operational objectives. Based on visible client demand, we
are aggressively moving forward with our geographic expansion plans. In
the second quarter alone, WNS added over 1,000 seats including new
delivery locations in Gdynia,
“Our investments in capability creation, technology-enablement and global infrastructure are resonating well with both existing and prospective clients. In order to properly leverage these investments going forward, the entire organization remains focused on enabling our sales force to improve productivity and accelerate our growth trajectory.”
Fiscal 2013 Guidance
WNS has updated guidance for the fiscal year ending
-
Revenue less repair payments* is expected to be between
$426 million and $438 million . This assumes an average GBP to USD exchange rate of 1.60 for the remainder of fiscal 2013. -
ANI* is expected to range between
$50 million and $54 million . This assumes an average USD to INR exchange rate of 53.0 for the remainder of fiscal 2013.
“The updated fiscal 2013 guidance is based on current visibility levels
and exchange rates. Guidance for the year reflects top line growth of 8%
to 11%, with 99% visibility to the midpoint of the range. We will
continue to focus on improving operating margins as the year progresses,
and expect our cash position to exceed debt levels by the end of fiscal
2013,” said
Conference Call
WNS will host a conference call on
About WNS
Safe Harbor Statement
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 and assumptions about our Company and our industry.
Generally, these forward-looking statements may be identified by the use
of terminology such as “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “will,” “seek,” “should” and similar expressions. These
statements include, among other things, the discussions of our strategic
initiatives and the expected resulting benefits, our growth
opportunities, industry environment, expectations concerning our future
financial performance and growth potential, including our fiscal 2013
guidance and future profitability, and expected foreign currency
exchange rates. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially from
those expressed or implied by such statements. Such risks and
uncertainties include but are not limited to Fusion’s volume of
business; our ability to successfully integrate Fusion’s business
operations with ours; our ability to successfully leverage Fusion’s
assets to grow our revenue, expand our service offerings and market
share and achieve accretive benefits from our acquisition of Fusion;
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
* See “About Non-GAAP Financial Measures” and the reconciliations of the historical non-GAAP financial measures to our GAAP operating results at the end of this release.
† Pass-through expenses refer to payments to repair centers that are reported as revenue as we act as the principal in our dealings with the third party repair centers. The same amount is correspondingly reported as cost of revenue.
About Non-GAAP Financial Measures
The financial information in this release is focused on non-GAAP
financial measures as we believe that they reflect more accurately our
operating performance. Reconciliations of these non-GAAP financial
measures to our GAAP operating results are included below. A discussion
of our GAAP measures are contained in “Part I –Item 5. Operating and
Financial Review and Prospects” accompanying our fiscal 2012 financial
statements submitted to the
For financial statement reporting purposes, WNS has two reportable
segments: WNS Global BPO and WNS Auto Claims BPO. Revenue less repair
payments is a non-GAAP financial measure that is calculated as (a)
revenue less (b) in the auto claims business, payments to repair centers
(1) for “fault” repair cases where WNS acts as the principal in its
dealings with the third party repair centers and its clients and (2) for
“non-fault” repair cases with respect to one client to whom WNS provides
services similar to its “fault” repair cases. WNS believes that revenue
less repair payments for “fault” repairs reflects more accurately the
value addition of the business process outsourcing services that it
directly provides to its clients. For more details, please see the
discussion in “Part I – Item 5. Operating and Financial Review and
Prospects – Overview” in our annual report on Form 20-F filed with the
WNS also presents (1) adjusted gross margin, which refers to adjusted gross profit (calculated as gross profit excluding share-based compensation expense) as a percentage of revenue less repair payments, (2) adjusted operating margin, which refers to adjusted operating profit (calculated as operating profit excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments, and (3) ANI, which is calculated as profit excluding amortization of intangible assets and share-based compensation expense, and 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. These non-GAAP measures are not meant to be considered in isolation or as a substitute for WNS’s financial results prepared in accordance with IFRS.
WNS (HOLDINGS) LIMITED | |||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
(Unaudited, amounts in millions, except share and per share data) | |||||||||||||||||||
Three months ended | |||||||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||||||
Revenue* |
$ |
113.1 | $ | 117.9 | $ | 107.8 | |||||||||||||
Cost of revenue* |
|
75.3 | 85.2 | 73.4 | |||||||||||||||
Gross profit | 37.8 | 32.7 | 34.4 | ||||||||||||||||
Operating expenses: | |||||||||||||||||||
Selling and marketing expenses | 7.2 | 7.0 | 7.4 | ||||||||||||||||
General and administrative expenses | 15.2 | 13.1 | 12.6 | ||||||||||||||||
Foreign exchange loss/(gains), net | 2.0 | (1.8 | ) | 2.4 | |||||||||||||||
Amortization of intangible assets | 6.5 | 7.5 | 6.6 | ||||||||||||||||
Operating profit | 6.8 | 6.9 | 5.2 | ||||||||||||||||
Other (income)/expenses, net | (1.0 | ) | 0.1 | (1.0 | ) | ||||||||||||||
Finance expense | 0.9 | 0.9 | 1.0 | ||||||||||||||||
Profit before income taxes | 6.9 | 5.8 | 5.2 | ||||||||||||||||
Provision for income taxes | 2.5 | 2.4 | 2.4 | ||||||||||||||||
Profit | $ | 4.3 | $ | 3.4 | $ | 2.8 | |||||||||||||
Earnings per share of ordinary share | |||||||||||||||||||
Basic | $ | 0.09 | $ | 0.08 | $ | 0.06 | |||||||||||||
Diluted | $ | 0.08 | $ | 0.08 | $ | 0.06 | |||||||||||||
* Revenue and cost of revenue for the quarters ended
Growth of revenue (GAAP) and revenue less repair payments (non-GAAP)
Three months ended |
Three months ended Sep 30, |
||||||||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
Sep 30, |
Jun 30, |
|||||||||||||||||
(Amounts in millions) |
|
(% growth) |
|||||||||||||||||||
Revenue (GAAP) | $ | 113.1 | $ | 117.9 | $ | 107.8 |
|
(4.1 | )% | 4.9 | % | ||||||||||
Less: Payments to repair centers | 5.8 | 17.7 | 5.2 | (67.1 | )% | 11.9 | % | ||||||||||||||
Revenue less repair payments (Non-GAAP) | $ | 107.3 | $ | 100.2 | $ | 102.6 | 7.1 | % | 4.5 | % | |||||||||||
Reconciliation of cost of revenue (GAAP to non-GAAP)
Three months ended | ||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
||||||||||
(Amounts in millions) | ||||||||||||
Cost of revenue (GAAP) | $ | 75.3 | $ | 85.2 | $ | 73.4 | ||||||
Less: Payments to repair centers | 5.8 | 17.7 | 5.2 | |||||||||
Less: Share-based compensation expense | 0.3 | 0.2 | 0.4 | |||||||||
Adjusted cost of revenue (excluding payment to repair centers and share-based compensation expense) (Non-GAAP) | $ | 69.2 | $ | 67.3 | $ | 67.8 | ||||||
Reconciliation of gross profit (GAAP to non-GAAP)
Three months ended | ||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
||||||||||||
(Amounts in millions) | ||||||||||||||
Gross profit (GAAP) | $ | 37.8 | $32.7 | $ | 34.4 | |||||||||
Add: Share-based compensation expense | 0.3 | 0.2 | 0.4 | |||||||||||
Adjusted gross profit (excluding share-based compensation expense) (Non-GAAP) | $ | 38.0 | $32.9 | $ | 34.8 | |||||||||
Three months ended | ||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
||||||||||||
Gross profit as a percentage of revenue (GAAP) | 33.4 | % | 27.7 | % | 31.9 | % | ||||||||
Adjusted gross profit (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 35.5 | % | 32.8 | % | 33.9 | % | ||||||||
Reconciliation of selling and marketing expenses (GAAP to non-GAAP)
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
(Amounts in millions) | |||||||||||||||
Selling and marketing expenses (GAAP) | $ | 7.2 | $ | 7.0 | $ | 7.4 | |||||||||
Less: Share-based compensation expense | 0.1 | 0.1 | 0.1 | ||||||||||||
Adjusted selling and marketing expenses (excluding share-based compensation expense) (Non-GAAP) | $ | 7.1 | $ | 6.9 | $ | 7.3 | |||||||||
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
Selling and marketing expenses as a percentage of revenue (GAAP) | 6.4 | % | 5.9 | % | 6.9 | % | |||||||||
Adjusted selling and marketing expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 6.6 | % | 6.9 | % | 7.1 | % | |||||||||
Reconciliation of general and administrative expenses (GAAP to non-GAAP)
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
(Amounts in millions) | |||||||||||||||
General and administrative expenses (GAAP) | $ | 15.2 | $ | 13.1 | $ | 12.6 | |||||||||
Less: Share-based compensation expense | 1.0 | 0.8 | 1.1 | ||||||||||||
Adjusted general and administrative expenses (excluding share-based compensation expense) (Non-GAAP) | $ | 14.2 | $ | 12.3 | $ | 11.5 | |||||||||
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
General and administrative expenses as a percentage of revenue (GAAP) | 13.4 | % | 11.1 | % | 11.7 | % | |||||||||
Adjusted general and administrative expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 13.2 | % | 12.3 | % | 11.2 | % | |||||||||
Reconciliation of operating profit (GAAP to non-GAAP)
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
(Amounts in millions) | |||||||||||||||
Operating profit (GAAP) | $ | 6.8 | $ | 6.9 | $ | 5.2 | |||||||||
Add: Amortization of intangible assets | 6.5 | 7.5 | $ | 6.6 | |||||||||||
Add: Share-based compensation expense | 1.4 | 1.1 | 1.7 | ||||||||||||
Adjusted operating profit (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 14.7 | $ | 15.5 | $ | 13.5 | |||||||||
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
Operating profit as a percentage of revenue (GAAP) | 6.0 | % | 5.8 | % | 4.9 | % | |||||||||
Adjusted operating profit (excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 13.7 | % | 15.4 | % | 13.2 | % | |||||||||
Reconciliation of profit (GAAP to non-GAAP)
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
(Amounts in millions) | |||||||||||||||
Profit (GAAP) | $ | 4.3 | $ | 3.4 | $ | 2.8 | |||||||||
Add: Amortization of intangible assets | 6.5 | 7.5 | 6.6 | ||||||||||||
Add: Share-based compensation expense | 1.4 | 1.1 | 1.7 | ||||||||||||
Adjusted net income (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 12.2 | $ | 12.0 | $ | 11.1 | |||||||||
Three months ended | |||||||||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||||||||
Profit as a percentage of revenue (GAAP) | 3.8 | % | 2.9 | % | 2.6 | % | |||||||||
Adjusted net income (excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 11.4 | % | 12.0 | % | 10.8 | % | |||||||||
Reconciliation of basic income per ADS (GAAP to non-GAAP)
Three months ended | ||||||||||||
Sep 30, |
|
Sep 30, |
Jun 30, |
|||||||||
Basic earnings per ADS (GAAP) | $ | 0.09 | $ | 0.08 | $ | 0.06 | ||||||
Add: Adjustments for amortization of intangible assets and share-based compensation expense | 0.15 | 0.19 | 0.16 | |||||||||
Adjusted basic net income per ADS (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 0.24 | $ | 0.27 | $ | 0.22 | ||||||
Reconciliation of diluted income per ADS (GAAP to non-GAAP)
Three months ended | |||||||||
Sep 30, |
Sep 30, |
Jun 30, |
|||||||
Diluted earnings per ADS (GAAP) | $0.08 | $0.08 | $0.06 | ||||||
Add: Adjustments for amortization of intangible assets and share-based compensation expense. | 0.16 | 0.18 | 0.16 | ||||||
Adjusted diluted net income per ADS (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $0.24 | $0.26 | $0.22 | ||||||
WNS (HOLDINGS) LIMITED |
||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||||||||
(Amounts in millions, except share and per share data) |
||||||||||||
As at | As at | |||||||||||
September 30, |
March 31, |
|||||||||||
(Unaudited) | ||||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 32.8 | $ | 46.7 | ||||||||
Marketable securities | 27.4 | 26.4 | ||||||||||
Trade receivables, net | 69.3 | 66.4 | ||||||||||
Unbilled revenue | 34.0 | 35.9 | ||||||||||
Funds held for clients | 21.1 | 20.7 | ||||||||||
Current tax assets | 4.0 | 3.9 | ||||||||||
Derivative assets | 7.9 | 3.7 | ||||||||||
Prepayments and other current assets | 24.0 | 21.9 | ||||||||||
Total current assets | 220.6 | 225.6 | ||||||||||
Non-current assets: | ||||||||||||
Investments | 0.0 | 0.0 | ||||||||||
Goodwill | 90.9 | 86.7 | ||||||||||
Intangible assets | 105.8 | 115.1 | ||||||||||
Property and equipment, net | 49.5 | 45.4 | ||||||||||
Derivative assets | 3.1 | 1.5 | ||||||||||
Deferred tax assets | 44.0 | 43.7 | ||||||||||
Other non-current assets | 6.8 | 6.9 | ||||||||||
Total non-current assets | 300.1 | 299.4 | ||||||||||
TOTAL ASSETS | $ | 520.6 | $ | 525.0 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Trade payables | $ | 33.7 | $ | 47.3 | ||||||||
Provisions and accrued expenses | 35.7 | 31.9 | ||||||||||
Derivative liabilities | 6.5 | 9.8 | ||||||||||
Pension and other employee obligations | 28.1 | 29.0 | ||||||||||
Short term line of credit | 31.0 | 24.0 | ||||||||||
Current portion of long term debt | 4.1 | 26.0 | ||||||||||
Deferred revenue | 6.1 | 6.2 | ||||||||||
Current taxes payable | 9.6 | 8.2 | ||||||||||
Other liabilities | 17.9 | 5.2 | ||||||||||
Total current liabilities | 172.7 | 187.6 | ||||||||||
Non-current liabilities: | ||||||||||||
Derivative liabilities | 0.8 | 1.2 | ||||||||||
Pension and other employee obligations | 4.6 | 4.6 | ||||||||||
Long term debt | 40.3 | 36.7 | ||||||||||
Deferred revenue | 3.9 | 4.1 | ||||||||||
Other non-current liabilities | 2.9 | 2.7 | ||||||||||
Deferred tax liabilities | 3.8 | 4.1 | ||||||||||
Total non-current liabilities | 56.3 | 53.3 | ||||||||||
TOTAL LIABILITIES | 229.0 | 240.9 | ||||||||||
Shareholders' equity: | ||||||||||||
Share capital (ordinary shares $ 0.16 (10 pence) par value, authorized 60,000,000 shares; issued: 50,335,337 and 50,078,881 shares each as at September 30, 2012 and March 31, 2012, respectively) | 7.9 | 7.8 | ||||||||||
Share premium | 266.6 | 263.5 | ||||||||||
Retained earnings | 66.3 | 59.1 | ||||||||||
Other components of equity | (49.1 | ) | (46.4 | ) | ||||||||
Total shareholders' equity | 291.6 | 284.1 | ||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 520.6 | $ | 525.0 | ||||||||
Source:
WNS (Holdings) Limited
Investors:
David
Mackey
Corporate SVP–Finance & Head of Investor Relations
+1
201 942 6261
ir@wns.com
or
Media:
Sumi
Gupta
Public Relations
+91 (22) 4095 2263
sumi.gupta@wns.com
; pr@wns.com