Exela Technologies Reports Mixed Results for Q1 2024 Author: Investing.com

Excel Technologies, Inc. (NASDAQ:), a global leader in business process automation, released its financial results for the first quarter of 2024, showing a decline in revenues while improving margins and reducing net loss compared to the previous year. The company’s revenue for the quarter was $258.8 million, down 5.4% from the prior year, partially attributable to the sale of its high-speed scanner business and the loss of a significant contract. Despite the decline in revenue, Exela Technologies saw an increase in gross margin and a significant reduction in net loss, primarily as a result of lower interest and debt costs.

Key takeaways

Exela Technologies saw its first-quarter 2024 revenue decline 5.4% year-over-year to $258.8 million.
Gross margins increased 107 basis points year-over-year, driven by automation and operating leverage.
The company reported a net loss of $25.6 million, an improvement of $20 million from the previous year.
Adjusted EBITDA was $12.9 million.
Exela Technologies is focused on revenue stabilization, margin improvement and strategic development initiatives for 2024.

Company perspective

The Management Board is optimistic about achieving the goals for the year, focusing on profitability and liquidity.
Exela Technologies intends to continue improving margins throughout 2024.

Bears highlights

Information and Transaction Processing Solutions (ITPS) segment revenues declined 9% year-over-year.
The company lost a low-margin contract worth $27 million, impacting revenues starting in January.
The Legal and Loss Prevention Services (LLPS) segment experienced a sequential decline of 12% due to project fluctuations.

Bullish highlights

The Healthcare Solutions and LLPS segments grew by approximately 3% and 6%, respectively.
Exela Technologies achieved a 96% renewal rate in the first quarter and acquired 85 new logos.
Selling, general and administrative expenses decreased 43 basis points year-over-year, primarily due to reduced legal and professional fees.

Misses you

Despite the improvement in gross margin, the company recorded a decline in revenues.
The loss of a significant contract and fluctuations in project segments affected financial results.

The most important questions and answers

During the question and answer session, management discussed revenue stabilization strategies and growth opportunities.
The company grows by taking on various financial initiatives and managing increasing taxes as net operating losses (NOLs) are utilized.

In summary, Exela Technologies is going through a difficult period characterized by declining revenues, but is showing signs of increasing operational efficiency. With a strategic focus on margin improvement and revenue stabilization, the company remains optimistic about its outlook for the remainder of 2024. Investors will be eagerly awaiting its next earnings call for an update on the company’s progress.

InvestingPro Insights

In light of Exela Technologies’ first quarter 2024 financial results, InvestingPro’s real-time data and analytics facilitate deeper insight into the company’s performance. Here are some key indicators and tips for investors to consider:

The company’s market capitalization is a modest $16.93 million, reflecting a smaller company that may be more susceptible to market fluctuations.

Exeli’s P/E ratio is currently negative at -0.12, indicating that the company is not profitable as of the trailing twelve months ending Q1 2024. This is in line with the reported net loss, despite improvement.

Revenue for the trailing twelve months as of Q1 2024 was $1,049.32 million, with a gross profit margin of 22.14%, which is an important figure considering the company’s efficiency in generating sales revenue.

InvestingPro’s guidance for Exela Technologies (XELA) highlights several key points for investors:

1. Shares have shown strong returns over the last month and three months, which may be of interest to short-term investors looking for recent positive momentum.

2. Exela Technologies does not pay a dividend, which can be crucial for income-oriented investors.

Investors looking for more comprehensive analysis can find additional InvestingPro guidance for Exela Technologies at https://www.investing.com/pro/XELA. There are currently 9 additional tips available on InvestingPro, offering insight into aspects such as price volatility, short-term liabilities and trade valuation multiples.

For those interested in taking a deeper dive into Exela Technologies’ financials and future prospects, please use the coupon code PRONEWS24 to get an additional 10% off your 1 or 2-year Pro and Pro+ subscription at InvestingPro. This can be a valuable tool for making informed investment decisions in a company going through a period of transformation.

Full transcript – Excel Tech (XELA) Q1 2024:

Operator: Good morning and welcome to the Exela Technologies Q1 2024 financial results conference call. All participants will be in listen-only mode. (Operator’s Manual) After today’s presentation there will be an opportunity to ask questions. (Operator Instructions) Please note that this event is recorded. I would now like to turn the conference over to Vincent Kondaveeti, Director of Investor Relations. Please go ahead.

Vincent Kondaveeti: Thank you, Gary, and good morning. We invite you to join our earnings call to discuss our first quarter results for the period ended March 31, 2024. Our presentation has been uploaded to the IR section of our website. The host of the call will be Matt Brown, our interim CFO. Par unfortunately had some travel delays and was unable to connect. Today’s agenda will largely follow our earlier calls with management comments followed by questions and answers. Certain matters that we will discuss on today’s call are forward-looking in nature and involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. These types of risks and uncertainties are outlined in our presentation. So I’ll turn the call over to Matt. Matt?

Matt Brown: Good morning everyone. Let’s go to slide 8, financial highlights. In the first quarter, we reported revenues of $258.8 million, down 5.4% year-over-year or 4.3% pro forma due to the sale of our high-speed scanner business. Sales of information and transaction processing solutions decreased 9% year-over-year, offset by growth in our Healthcare Solutions and Legal Services & Loss Prevention segments of approximately 3% and 6%, respectively. As a result, IPTS declined 3% in the first quarter due to the loss of a $27 million low-margin contract renewal. Healthcare solutions sales increased 4% with continued volume growth, and LLPS sales decreased 12% due to project fluctuations. First quarter gross margins were 22%, up 107 basis points year over year, and we remain focused on increasing automation and operating leverage. Healthcare and LLPS margins increased 296 basis points and 242 basis points year-over-year, and ITPS margin remained relatively flat given contract termination. Selling, general and administrative expenses decreased 43 basis points year-over-year, primarily due to reductions in legal and professional fees. We are investing in new businesses such as Reaktr.ai and transitioning from CapEx to OpEx as we move our data center infrastructure to the cloud. Since the end of the year, we have consolidated over 100,000 square feet of real estate and approximately 340,000 square feet are undergoing additional consolidation. We have made significant progress on savings initiatives, but we still have significant opportunity to improve margins throughout the rest of the year. We recorded a net loss of $25.6 million, an improvement of $20 million year-over-year, primarily due to lower interest and debt expense. Adjusted EBITDA was $12.9 million and we expect margins to continue to improve throughout the year. On page 10 we present both the most important and worst financial moments. Despite many adversities, we achieved improvement in gross margin. On the balance sheet, short-term liabilities decreased by 23% and interest costs decreased by 52% year-on-year. While there have been a number of customer churns since January and a $27 million contract expiring, we see opportunities for revenue stabilization and growth thanks to both a 96% renewal rate in the first quarter and 85 new logo acquisitions. We are focused on increasing liquidity and managing increasing taxes as our NOLs decline. Unrestricted cash at the end of the first quarter was approximately $10 million after interest payments, while operating cash flow continues to improve and we are pursuing various financing initiatives in parallel. In 2024, we will continue to focus on revenue stabilization, margin improvement and strategic growth initiatives. We are optimistic about achieving many of our goals this year as profitability and liquidity continue to improve. Thank you. Now we will open the queue for asking questions.

Operator: :

Matt Brown: Well, thank you all for joining us. We hope to keep you updated on our future progress. See you again on the Q2 call.

Operator: The conference is over. Thank you for attending today’s presentation. You can hang up now.

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