PRESS RELEASE
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WNS Announces Third Quarter Fiscal 2009 Earnings; Reaffirms Guidance for Fiscal 2009
Revenue for the fiscal third quarter 2009 of
“We had another strong quarter in terms of bottom line growth and margin
expansion, which resulted in the highest adjusted net income quarterly
results we have ever achieved. While the impact of exchange rates
continues to affect our top line, we experienced increased volumes and
organic growth on a constant currency basis,” said
Net income including minority interest for the fiscal third quarter 2009
was
Adjusted net income was
WNS recorded a basic income per ADS of
“Despite the base business being on track this quarter, the continued
decline of the British Pound significantly impacted our reported
revenues. However, our adjusted net income was strong and we see
additional opportunities to improve profitability by achieving greater
synergies through integration of our recent acquisitions,” said
Financial Highlights: Fiscal Third
Quarter Ended
-
Quarterly revenue of
$134.0 million , up 15.9% from the corresponding quarter last year. -
Quarterly revenue less repair payments of
$99.6 million , up 34.5% from the corresponding quarter last year. -
Quarterly net income including minority interest of
$2.1 million compared to$5.5 million from the corresponding quarter last year. -
Quarterly adjusted net income (or net income excluding amortization of
intangible assets, share-based compensation, related fringe benefit
taxes and minority interest share of loss) of
$12.9 million , up 59.8% from the corresponding quarter last year. -
Quarterly basic income per ADS of
$0.05 , compared with$0.13 for the corresponding quarter last year. -
Quarterly adjusted basic income per ADS (or income per share excluding
amortization of intangible assets, share-based compensation, related
fringe benefit taxes and minority interest share of loss) of
$0.30 , up from$0.19 for the corresponding quarter last year.
Reconciliations of non-GAAP financial measures to GAAP operating results are included at the end of this release.
Key Business and Organizational Developments
In the past quarter, WNS announced the following key developments:
-
Contract renewal for three years with extension options with
Centrica , WNS’s third largest client, to provide support for customer service for its subsidiaries,British Gas and Direct Energy. -
Contract renewal for six years with
SAS Airlines , the largest airline company in Scandinavia, to deliver passenger revenue accounting processes. - Contract renewal for five years with SITA, a global specialist in air transport communication and information technology solutions, to enhance supply chain management and customer service.
-
On
January 27, 2009 , WNS announced thatNeeraj Bhargava will transition into the role of Strategic Advisor. Mr. Bhargava will remain in his current role as CEO and Board member until a successor transitions into the CEO position.
Fiscal 2009 Guidance
WNS reiterated the following guidance for the fiscal year ending
-
Revenue less repair payments is expected to be between
$385 million and $400 million . This assumes an average USD to GBP range of 1.45 to 1.60 for the remainder of the year. -
Adjusted net income (or net income excluding amortization of
intangible assets, share-based compensation, related fringe benefit
taxes and minority interest share of loss) is expected to range
between
$46 million and $49 million .
“The value of the British Pound has further declined since we last updated our revenue guidance. While we are confident of meeting our guidance, our top line performance will likely fall to the lower end of the range for the fiscal year 2009 given where the Pound is today,” continued Misra. “Cash generation remains strong and our cash balance has grown. We are well-positioned to meet our debt obligations in
Conference Call
WNS will host a conference call on
About WNS
About Non-GAAP Financial Measures
For financial statement reporting purposes, the company has two reportable segments: WNS Global BPO and WNS Auto Claims BPO. In the auto claims segment, which includes
In order to provide accident-management services, the Company 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. The Company uses revenue less repair payments for “fault” repairs as a primary measure to allocate resources and measure segment performance. Revenue less repair payments is a non-GAAP measure which is calculated as revenue less payments to repair centers. For “Non fault repairs,” revenue including repair payments is used as a primary measure. As the Company provides a consolidated suite of accident management services including credit hire and credit repair for its “Non fault” repairs business, the Company believes that measurement of that line of business has to be on a basis that includes repair payments in revenue.
The Company 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 the Company’s financial results prepared in accordance with US GAAP.
Safe Harbor Statement under the provisions of the United States Private Securities Litigation Reform Act of 1995
This news 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 include statements regarding expected future financial results. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected by these forward looking statements. These risks and uncertainties include but are not limited to 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 attract and retain clients; 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 UK to offshore outsourcing; regulatory, legislative and judicial developments; increasing competition in the business process outsourcing industry; political or economic instability in
Reconciliation of revenue less repair payments (non-GAAP) to revenue (GAAP) | ||||||||||||
Three months ended | Nine months ended | |||||||||||
December 31, | December 31, | |||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||
(Amount in thousands) | ||||||||||||
Revenue less repair payments (Non-GAAP) | $ | 99,607 | $ | 74,056 | $ | 290,831 | $ | 215,564 | ||||
Add: Payments to repair centers | 34,403 | 41,589 | 115,920 | 128,182 | ||||||||
Revenue (GAAP) | $ | 134,010 | $ | 115,645 | $ | 406,751 | $ | 343,746 | ||||
Reconciliation of cost of revenue (non-GAAP to GAAP) | ||||||||||||
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December 31, | December 31, | |||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||
(Amount in thousands) | ||||||||||||
Cost of revenue (Non-GAAP) | $ | 62,627 | $ | 50,272 | $ | 194,509 | $ | 146,354 | ||||
Add: Payments to repair centers | 34,403 | 41,589 | 115,920 | 128,182 | ||||||||
Cost of revenue (GAAP) | $ | 97,030 | $ | 91,862 | $ | 310,429 | $ | 274,536 | ||||
Reconciliation of selling, general and administrative expense (non-GAAP to GAAP) | ||||||||||||
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2008 | 2007 | 2008 | 2007 | |||||||||
(Amount in thousands) | ||||||||||||
Selling, general and administrative | ||||||||||||
expenses (excluding share-based compensation | ||||||||||||
expense and FBT(1)) (Non-GAAP) | $ | 16,206 | $ | 16,653 | $ | 50,439 | $ | 47,367 | ||||
Add: Share-based compensation expense | 2,612 | 892 | 7,349 | 3,056 | ||||||||
Add: FBT1 | 84 | 232 | 615 | 859 | ||||||||
Selling, general and administrative expenses (GAAP) | $ | 18,902 | $ | 17,777 | $ | 58,403 | $ | 51,282 |
1 | FBT means the fringe benefit taxes on options and restricted share units granted to employees under the WNS 2002 Stock Incentive Plan and the WNS 2006 Incentive Award Plan (as applicable) payable by WNS to the government of India. |
Three months ended | Nine months ended | ||||||||||
December 31, | December 31, | ||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||
(Amount in thousands) | |||||||||||
Operating income (excluding amortization and | |||||||||||
impairment of goodwill and intangible | |||||||||||
assets, share-based compensation and FBT(1)) | |||||||||||
(Non-GAAP) | $ | 21,667 | $ | 7,724 | $ | 48,564 | $ | 23,696 | |||
Less: Amortization of intangible assets | 7,419 | 897 | 16,900 | 2,205 | |||||||
Less: Impairment of goodwill and intangible assets | — | — | — | 15,464 | |||||||
Less: Share-based compensation expense | 3,505 | 1,486 | 10,030 | 4,909 | |||||||
Less: FBT1 | 84 | 232 | 615 | 859 | |||||||
Operating (loss) income (GAAP) | $ | 10,659 | $ | 5,109 | $ | 21,019 | $ | 259 | |||
Reconciliation of net income (non-GAAP to GAAP) | |||||||||||
Three months ended | Nine months ended | ||||||||||
December 31, | December 31, | ||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||
(Amount in thousands) | |||||||||||
Net income (excluding amortization and | |||||||||||
impairment of goodwill and intangible | |||||||||||
assets, share-based compensation, FBT(1) and | |||||||||||
minority interest share of loss) (Non-GAAP) | $ | 12,894 | $ | 8,069 | $ | 32,997 | $ | 26,877 | |||
Less: Amortization of intangible assets | 7,419 | 897 | 16,900 | 2,205 | |||||||
Less: Impairment of goodwill and intangible assets | — | — | — | 15,464 | |||||||
Less: Share-based compensation expense | 3,505 | 1,486 | 10,030 | 4,909 | |||||||
Less: FBT1 | 84 | 232 | 615 | 859 | |||||||
Add: Minority interest share of loss | 180 | — | 180 | — | |||||||
Net income (GAAP) | $ | 2,066 | $ | 5,454 | $ | 5,632 | $ | 3,440 |
1 | FBT means the fringe benefit taxes on options and restricted share units granted to employees under the WNS 2002 Stock Incentive Plan and the WNS 2006 Incentive Award Plan (as applicable) payable by WNS to the government of India. |
Reconciliation of Basic income per ADS (non-GAAP to GAAP) | |||||||||||
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December 31, | December 31, | ||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||
Basic income per ADS (excluding amortization | |||||||||||
and impairment of goodwill and intangible | |||||||||||
assets, share-based compensation, FBT(1) and | |||||||||||
minority interest share of loss) (Non-GAAP) | $ | 0.30 | $ | 0.19 | $ | 0.78 | $ | 0.64 | |||
Less: Adjustments for amortization and | |||||||||||
impairment of goodwill and intangible | |||||||||||
assets, share-based compensation, FBT(1) and | |||||||||||
minority interest share of loss | 0.25 | 0.06 | 0.65 | 0.56 | |||||||
Basic income per ADS (GAAP) | $ | 0.05 | $ | 0.13 | $ | 0.13 | $ | 0.08 | |||
Reconciliation of Diluted income per ADS (non-GAAP to GAAP) | |||||||||||
Three months ended | Nine months ended | ||||||||||
December 31, | December 31, | ||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||
Diluted income per ADS (excluding | |||||||||||
amortization and impairment of goodwill | |||||||||||
and intangible assets, share-based | |||||||||||
compensation, FBT(1) and minority interest | |||||||||||
share of loss) (Non-GAAP) | $ | 0.30 | $ | 0.19 | $ | 0.76 | $ | 0.63 | |||
Less: Adjustments for amortization and | |||||||||||
impairment of goodwill and intangible | |||||||||||
assets, share-based compensation, FBT(1 )and | |||||||||||
minority interest share of loss | 0.25 | 0.06 | 0.63 | 0.55 | |||||||
Diluted income/(loss) per ADS (GAAP) | $ | 0.05 | $ | 0.13 | $ | 0.13 | $ | 0.08 |
1 | FBT means the fringe benefit taxes on options and restricted share units granted to employees under the WNS 2002 Stock Incentive Plan and the WNS 2006 Incentive Award Plan (as applicable) payable by WNS to the government of India. |
WNS (HOLDINGS) LIMITED | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenue | ||||||||||||||||
Third parties | $ | 133,289 | $ | 114,781 | $ | 404,250 | $ | 341,268 | ||||||||
Related parties | 721 | 864 | 2,501 | 2,478 | ||||||||||||
134,010 | 115,645 | 406,751 | 343,746 | |||||||||||||
Cost of revenue | 97,030 | 91,862 | 310,429 | 274,536 | ||||||||||||
Gross profit | 36,980 | 23,783 | 96,322 | 69,210 | ||||||||||||
Operating expenses | ||||||||||||||||
Selling, general and administrative expenses | 18,902 | 17,777 | 58,403 | 51,282 | ||||||||||||
Amortization of intangible assets | 7,419 | 897 | 16,900 | 2,205 | ||||||||||||
Impairment of goodwill and intangible assets | — | — | — | 15,464 | ||||||||||||
Operating income | 10,659 | 5,109 | 21,019 | 259 | ||||||||||||
Other (expense) income, net | (4,113 | ) | 2,052 | (5,901 | ) | 6,963 | ||||||||||
Interest expense | (3,955 | ) | (21 | ) | (7,322 | ) | (23 | ) | ||||||||
Income before income taxes | 2,591 | 7,140 | 7,796 | 7,199 | ||||||||||||
Provision for income taxes | (705 | ) | (1,686 | ) | (2,344 | ) | (3,759 | ) | ||||||||
Income before minority interests | 1,886 | 5,454 | 5,452 | 3,440 | ||||||||||||
Minority interest share of loss | 180 | — | 180 | — | ||||||||||||
Net income | $ | 2,066 | $ | 5,454 | 5,632 | $ | 3,440 | |||||||||
Basic income per share | $ | 0.05 | $ | 0.13 | $ | 0.13 | $ | 0.08 | ||||||||
Diluted income per share | $ | 0.05 | $ | 0.13 | $ | 0.13 | $ | 0.08 |
WNS (HOLDINGS) LIMITED | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Amounts in thousands, except share and per share data) | ||||||
December 31 | March 31 | |||||
2008 | 2008 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 36,628 | $ | 102,698 | ||
Bank deposits and marketable securities | — | 8,074 | ||||
Accounts receivable, net of allowance of $7,564 and $1,784, respectively | 62,221 | 47,302 | ||||
Accounts receivable — related parties | 47 | 586 | ||||
Funds held for clients | 4,909 | 6,473 | ||||
Employee receivables | 1,126 | 1,179 | ||||
Prepaid expenses | 4,440 | 3,776 | ||||
Prepaid income taxes | 3,256 | 2,776 | ||||
Deferred tax assets— current | 672 | 618 | ||||
Foreign currency derivative contracts — current | 10,184 | — | ||||
Other current assets | 17,959 | 8,596 | ||||
Total current assets | 141,442 | 182,078 | ||||
Goodwill | 85,093 | 87,470 | ||||
Intangible assets, net | 227,418 | 9,393 | ||||
Property, plant and equipment, net | 54,014 | 50,840 | ||||
Other assets — non current | 2,719 | 1,278 | ||||
Deposits | 8,420 | 7,391 | ||||
Deferred tax assets — non current | 16,129 | 8,055 | ||||
TOTAL ASSETS | $ | 535,235 | $ | 346,505 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 22,905 | $ | 15,562 | ||
Accounts payable — related parties | — | 6 | ||||
Long term debt — current | 20,000 | — | ||||
Short term line of credit | 5,511 | — | ||||
Accrued employee costs | 25,215 | 26,848 | ||||
Deferred revenue — current | 6,326 | 7,790 | ||||
Income taxes payable | 4,693 | 1,879 | ||||
Deferred tax liabilities — current | 1,489 | 211 | ||||
Accrual for earn-out payment | — | 33,699 | ||||
Other current liabilities | 35,882 | 25,806 | ||||
Total current liabilities | 122,021 | 111,801 | ||||
Long term debt — non current | 180,000 | — | ||||
Deferred revenue — non current | 3,134 | 1,549 | ||||
Deferred rent | 2,301 | 2,627 | ||||
Accrued pension liability | 2,152 | 1,544 | ||||
Deferred tax liabilities — non current | 10,709 | 1,834 | ||||
Liability on outstanding derivative and interest swap contracts — non current | 11,818 | — | ||||
Minority interest | 120 | — | ||||
TOTAL LIABILITIES | 332,255 | 119,355 | ||||
Shareholders’ equity: | ||||||
Ordinary shares, $0.16 (10 pence) par value, authorized: 50,000,000 shares; Issued and outstanding: 42,582,566 and 42,363,100 shares, respectively | 6,664 | 6,622 | ||||
Additional paid-in capital | 180,182 | 167,459 | ||||
Ordinary shares subscribed: Nil and 1,666 shares, respectively | — | 10 | ||||
Retained earnings | 44,471 | 38,839 | ||||
Accumulated other comprehensive (loss) income | (28,337 | ) | 14,220 | |||
Total shareholders’ equity | 202,980 | 227,150 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 535,235 | $ | 346,505 |
WNS (HOLDINGS) LIMITED | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(UNAUDITED) | ||||||
(Amounts in thousands) | ||||||
Nine months ended | ||||||
December 31, | ||||||
2008 | 2007 | |||||
Cash flows from operating activities | ||||||
Net cash provided by operating activities | $ | 40,441 | $ | 20,730 | ||
Cash flows from investing activities | ||||||
Acquisitions, net of cash received | (291,225 | ) | (34,815 | ) | ||
Facility and property cost | (16,800 | ) | (21,725 | ) | ||
Proceeds from sale of assets, net | 219 | 101 | ||||
Transfer of delivery centre to AVIVA | — | 1,570 | ||||
Marketable securities and deposits | 7,687 | 12,000 | ||||
Net cash used in investing activities | (300,119 | ) | (42,869 | ) | ||
Cash flows from financing activities | ||||||
Proceeds from exercise of stock options | 1,103 | 1,851 | ||||
Excess tax benefits from share-based compensation | 1,544 | 1,987 | ||||
Proceeds from long term debt, net | 199,438 | — | ||||
Initial Public Offering expenses | — | (150 | ) | |||
Short term borrowing availed | 7,980 | — | ||||
Short term borrowing repaid | (9,244 | ) | — | |||
Principal payments under capital leases | (182 | ) | (7 | ) | ||
Net cash provided by financing activities | 200,640 | 3,681 | ||||
Effect of exchange rate changes on cash and cash equivalents | (7,032 | ) | 2,643 | |||
Net change in cash and cash equivalents | (66,070 | ) | (15,815 | ) | ||
Cash and cash equivalents at beginning of period | 102,698 | 112,340 | ||||
Cash and cash equivalents at end of period | $ | 36,628 | $ | 96,525 |
Source:
Investors:
WNS (Holdings) Limited
Alan Katz, +1-212-599-6960 ext. 241
VP — Investor Relations
ir@wnsgs.com
Media:
CJP Communications
Josh Passman, +1-212-279-3115 x203
jpassman@cjpcom.com