Q1 2020 Earnings Call
Earnings Conference call at this time, all participants are any listen only mode.
After the speaker's remarks, there will be a question and answer session to ask your question. During the session. You want me to press Star one on your telephone keypad.
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Thank you.
Welcome everyone to get mixed incorporated's, 2021st quarter earnings Conference call.
Joining me to discuss the quarters, Ebix, Chairman, President and CEO, Robert Arena, Ebix CFO, Steve Hamilton, President North America operations absolutely.
Now let me quickly cover the safe Harbor some of those statements that we make today are forward looking including among others statements regarding your mixes future investments, our long term growth and innovation.
The performance of our business, so that our use of cash.
These statements involve a number of risks and uncertainties that might cause actual results could differ materially from those projected in the forward looking statement.
Please note that these forward looking statements reflect our opinions only as of the data. This presentation and we undertake no obligation to revise or public. We wrote was released the results of any revisions to these forward looking statements in light of newer information or future events.
Additional information concerning factors that could cause actual results to materially differ from those and the forward looking statements made today are contained in our S. You see your filings were supposed to more detailed description under risk factors that may affect our result.
Our press release announcing Q1 2020 results was issued this morning. The audio this investor call. It's also being webcast live on the website at Www Dot Ebix Dot com forward Slash webcast. You can look at Ebix is financials beyond what has been to provide and their release on our website at www Dot Ebix Dot com.
The audio and the text transcript of this call will be available on our Investor home page on the Ebix website after four PM eastern time today.
Let me now discuss the key metrics in our Q1 20 to 20 really.
Q1 diluted EPS was 81 cents and non-GAAP diluted EPS was not easily access.
Q1, operating cash flow was 29 point sixmillion.
Q1 revenues were up 137.9 million in constant currency revenues of 141.6 million.
Q1, GAAP operating income was 34.3 million and non-GAAP operating income was 39.9 million.
Revenue in Q1, 2020 decreased 4% from a year ago 237.9 million, primarily due to the headwinds associated with the impact of cobot 19 on a worldwide businesses beginning March 2020.
On a constant currency basis. You. This is Q1 2020 revenue decreased only 1% year over year 241.6 million, that's compared to 142.9 million in Q1 or 2019.
After excluding the revenues from the Forex travel and remittance businesses that were hit the most in March by Cobot 19, Q1, 2020 revenues grew 15% as compared to Q1 2019.
In Q1 or EBIT cash revenue was the largest channel for Ebix accounted for 56% the company as revenues and our insurance exchange channel accounted for 32%.
The EBIT cash financial exchange reported revenue was 77.9 million in Q1 2020 compared to 77.7 million in Q1, 2019, and 81.2 million in Q4 2019, beginning in March 2020, our businesses in the area of onsite consulting travel foreign exchange.
Remittance, and education, where hit where hits severely because of cobot 19.
Wants to panic led to a global shutdown and the virtual human cure curfew was imposed in countries like India effected these business lines was natural.
Considering that we feel good about Q1 2020 results and the resilience shown by our employers across the world to allow us to keep supporting our b to b clients.
As a subsequent event we receive court approval from the courts for the acquisition of the bus exchange business, namely try amex on a liability free basis try Max's a market leader in India and the bus exchange Arena in terms of software and firmware associated with automating the enterprise systems and buses and bus depot.
Well the recurring revenue biggest that spans across 18 states in India, we see that as an accretive acquisition and are looking forward to integrating it into our business.
I will now I'll turn the call over to Steve.
Thanks Darrin.
I wanted to get my first quarterly earnings call by saying, how excited and to be in the CFO role Ebix I've known Robyn Erin and the management team for the past six plus years as their lead banker.
During that time adult and look forward the team and as importantly, a strong belief in the strategic vision that Robin has for this company.
I want to thank Robin Darin and the board of directors for their supported me and I look forward to many years of helping Robyn and the team continue their long term success guiding ebix.
We operate an unprecedented times the cobot 19 global pandemic has had a negative economic impact across the globe.
An industry doubles virtually all of their revenues other industries had been severely hampered ebix, we've felt their share a pain as well to date, but the results that we have produced in the first quarter provide positive evidence that ebix is prepared to survive. This global economic seizure and thrive once our world returns to normal economic returns.
This management team has taken quick and decisive steps to streamline our cost structure and we'll continue to proactively manage our expenses through the crisis.
Our topline performance in Q1 with year over year in sequential constant currency revenues decreasing <unk>, 0.9%.
4.2% respectively.
It is encouraging.
Our company's diversity of revenues, both by geography, and solutions and services, our customer stickiness and the recurring and repeating nature of a large percentage of our revenue base is the foundation that will allow ebix to operate successfully through this crisis as we see it unfolding.
With that I'll turn to some financial results.
Ebix is gross margin in Q1, 20 was 58.3% down sequentially from 63.7% in the fourth quarter of 19 and down year over year from 67.9% in Q1 of 2019.
Your next cash had a surge in sales in our payment solutions business in India in the first quarter 2020, due to increased demand for electronic payment products as a result of the country wide locked down for the coated 19 fantastic.
These revenues carry a lower margin than other solutions and services offered by Ebix.
Operating income for Q1, 2020 was $34.3 million a decrease from 54.1 million in the first quarter of 2019.
Primarily due to the impact of Kevin 19, and a 15.4 billion dollar reduction of the acquisition accrual for its cash that was taken in Q1 19.
Cash flows from operating activities was $29.6 million in Q1 2020.
Which compares favorably to 21 million in the comparable prior year.
During Q1, 2020, we had cash usage of $24.7 million to reduce the working capital facilities in India during the quarter.
$3.8 million for principal repayments on our outstanding term loan.
$2.3 billion for dividend payments 558000 on cap ex and $1.1 million a cash tax payments. We funded these initiatives from existing cash plus operating cash flows generated during Q1 2020.
Ebix ended the quarter with cash cash equivalents in short term investments of $71.1 billion.
Versus 77.7 million at 12 31 90.
If you include the restricted cash in our balance sheet much of which as short term time deposits and other time deposits with maturities in excess of a year that had a positive with banks total funds available Ebix at 331, 20 was $98.4 billion versus 115.9 billion at 12.
Anyone 19.
That decline was driven mostly by the $24.7 million aforementioned paydown of the Indian working capital facilities in the first quarter.
Our balance sheet remains healthy with the current ratio of 1.7 at March 31st 2020.
And working capital of $130.5 million.
The company's consolidated net debt leverage ratio increased from 3.63 times at 12, 31 19 to approximately four times at March 31st 2020, due to the operating impacts discussed earlier.
We're very pleased to have closed on an amendment to our senior credit facilities last week.
We appreciate the constructive supporting our syndicate of bags that has allowed us to amend certain terms about credit agreement in anticipation of the negative impacts of the cobot 19 pandemic on our operations.
Bankrate the supported Ebix for years and the company values its relationships with these banks.
Finally.
They put the 10-Q two the first quarter of 2020 will be filed later today with the FCC.
In closing Ebix is looking forward to the future.
While the current 19 pandemic will provide its challenges to the company in the interim.
Longer term, we are focused on continuing to move forward with ebix cash in the IPO.
Growing our collection in solutions and services organically.
And continue to evaluate inorganic opportunities to build market share or add complementary technology and services to units.
I look forward to working with each of our investor groups in will work create value for all of our company stakeholders over time.
Thanks to all of our employees for their hard work and efforts for the company and thanks to all of our investors for their supported units.
We'd like to now I'll turn the call over to the President of our North American insurance businesses Ash Sony for his remarks on the first quarter.
Cash.
Thank you Steve.
Good morning, everyone.
Q1 was a challenging period for businesses across the globe because of covert 19.
Having said that the Ebix business in North America for the large part stayed resilient and only a few units were impacted by the slowdown.
Our major exchanges, including a new days held when flex life and certificate tracking grew compared to Q1 of 2019, despite the tough market conditions.
These were offset by declines in on medical certification business consulting underwriting exchange and the item businesses.
During the second half of Q1, we transitioned to the work from home order.
All our systems and exchanges continue to run normally during this transition.
Our clients have been highly appreciative of our ability to quickly adopt and support them. During this transition.
I will provide no I wouldn't additive on the key aspects of the major business units and also provide an assessment on the ongoing impact as the result of took over 19 market conditions.
We saw an uptick in transactions in March or not a new p. exchange as caught irrs revamp their products due to market conditions.
Ebix has a dominant position and the annuities market has to be service dozens of carriers and hundreds of distributors.
We continue to close new deals in Q1, including Brighthouse Ocean view and fidelity and got Andy.
Last quarter, we announced that Ebix has been chosen as the technology partner by one of the largest distribute doesn't the country.
I'm pleased to see that we have made significant progress towards establishing this relationship which extends across both our life and annuity block phones.
Current plans I forget them live on the platform before the end of the year.
This is one of the largest deals in this space and recent Diaz as it Didnt was.
New transaction volumes from when you take out Irrs and 15 lifestyle centers.
We're also seeing a significant uptick in demand for electronic signatures as carriers and distribute does adapt to work from home and contactless setting the demand for Ebix products and services that digitized and automate the end to end process.
It is expected to increase.
Health exchange grew year over year in Q1.
Subscription based smarter and a diverse customer base protects us from market downturns.
We may see some impact due to the high unemployment rates, but even with furloughs and lay off the need to administer health plans will continue to hold steady.
We are making steady progress towards expanding our presence in the voluntary market.
Our products are now getting coverage by analysts firms like silent.
We plan to run.
We plan to run.
Major campaigns for the remainder of the year.
To generate more traction in this market.
Oh, but in this business was moderately down compared to Q1 of last year and marginally up sequentially compared to the last quarter.
We have struck a major partnership but see because one of the largest brokers in the space.
We will see a pickup in activity to whats the second half of the or.
Our life illustration exchange stayed flat compared to Q1 of 2019 and was only marginally down sequentially compared to Q4 of 2019.
The transaction volumes in Q1 stayed steady.
The slight drop off was on account of certain custom projects that were delayed due to covert 19.
We expect these to pick up in the coming quarters.
We added new clients to the platform, including one in America, and Fidelity <unk> Guaranty life.
We also launched our illustrations analytics platform and are now actively engaged with.
But at least a half a dozen carriers, who had evaluating our product.
We see this as a significant launch and will provide incremental revenues in the future.
Our CRM exchange was marginally down as a result of the slowdown in decisions on new deals, but we expect this unit to start picking up late in the year.
The large distributor Reengage got engaging with which I mentioned earlier.
We'll be adding our CRM exchange to that network.
Our medical certification business is a seasonal business wed in Q4 is the strongest quarter.
Because of doctors gaming tax deductibility on their see I mean purchases.
Accordingly, the Sammy business in Q1, Twentytwenty was down approximately 3 million compared to Q4 2019.
We have instituted several measures to grow this business.
Significant among the measures is a major shift towards digital marketing.
This will have a favorable impact on both the top and bottom line for this business.
We had already seeing positive momentum and expect Q2 wouldn't be hired and drive new compared to Q1.
The certificate trucking business was slightly higher as compared to the same period last year.
And sequentially compared to Q4.
We added 17, new customers in Q1 compared to nine during the same period last year.
Our enhanced sales efforts are contributing to a healthy pipeline.
In Q4 of 2019, we struck a partnership with see Soc.
Consortium in California was member companies are being converted to the Ebix CSAC platform.
We are currently in discussions with or what.
Despite the market conditions, we expect this unit to hold steady.
Our underwriting exchange had an impact due to the market conditions.
The sales cycles for this unit and to be longer and more complex.
We saw projects being delayed towards the second half of Q1 because of covert 19.
We saw agendas slowdown in this segment does carriers were unable to complete the underwriting process.
This is going to create a significant backlog and we expect got is.
Our clients on the underwriting exchange include the largest life scout irrs in the market.
We added a significant new Cline security benefit.
As partner with Ebix to build out that underwriting platform for the direct to consumer market.
We expect this unit to hold steady and to start growing again in the second half of the as carriers Reengage on projects that are temporarily on hold.
We are seeing a lot of activity in the direct to consumer segment of the market, we see our clients, making significant investments in building out that direct to consumer distribution channels.
And the Ebix life exchanges are well positioned to benefit from this trend.
Outlook in this segment is very positive as we have added many new prospects for the pipeline.
Longer term, we expect this business to benefit.
I will now provide a perspective on the outlook for on North American business in the wake up the ongoing market conditions.
We expect the short term impact could be minimal.
This is primarily due to a resilient business smarter.
Ebix bid I've, a significant portion of it should have new through exchanges.
These are subscription and transaction type revenue motors that a better geared to withstand any slowdown.
Our diverse customer base and network, which includes hundreds of carriers top banks brokerage and White House says thousands of distribute does.
<unk> brand name medical institutions, and two thousands of employer groups, including many of the top fortune 500, minimizes customer concentration risk for us.
Also our customers on large rather capitalized entities and we're confident that they would have it stand temporary challenges.
There are a few businesses such as I walk us comp E.D. I business group, and Nordmann solutions and certain segments of our consulting business that may see a temporary slowdown as these businesses tend to be sensitive to higher unemployment rates.
And Mockups slowdowns.
These are businesses represent a small portion of our overall revenue in North America. So even a temporary slowdown should not have a material impact on overall revenue.
On the positive side <unk> dynamics that play into the strength of Ebix.
We believe the industry, even accelerate investment in Digitization off that core operations.
Particular emphasis will be on both the sees that that's the customer.
We will see a dive to whats contactless selling which will create demand for our core businesses, including agency management electronic order entry digital signatures.
Automated underwriting and electronic policy delivery solutions.
Companies that don't automate been find themselves exposed to execution and compliance risks.
We've been also see a major shift towards.
Redesign of insurance in annuity products.
The trend.
Towards direct to consumer will accelerate traditional underwriting will transition to more automated underwriting.
The optimism is reflected in a pipeline that a strong.
And deals that we continue to close.
We are seeing opportunities for <unk>, Adam business, including the medical content and ask a doctor services.
We are engaged in partnership discussions with several entities as there's a growing acceptance of telemedicine.
The mission critical nature of our products the quality of our customers in a strong partnerships with them.
And a stellar team at Ebix second quickly adapt to market conditions and capitalize on new opportunities that emerged from changing market conditions exemplifies our strong and resilient business motor.
I would not pass along to Robin for his comments.
Thanks Ash.
Good morning, everyone.
Let me at the outset. Thank you for participating in this call in the mid stuff essentially is less spend dynamic.
I'm clearly pleased with these itself and that is flat, but at Lilly in nature of Ebix business that has been built brick by brick over the span of two decades.
On a human level it had been painful to see the pain that covert 19 has brought across the world. Both in terms of health crisis and accommodate unleashed on economy. The crossed a little what's most painful about covert 19 is the deep impact. It has had on the life of the underprivileged the low to middle class.
Then the middle class in that auto.
The corporate sector has also felt the pain and part of that pain has trickled down to its employees across all section to society. It is very difficult today to find companies that have been unimpacted by coal that 19.
Companies I've had to fight the impact of Cowen 19 on many fronts.
Keeping their businesses functioning keeping that employees functional if acquired huge drops in revenue.
Need to reduce their battle and other costs as also to meet their lending agreement requirements and finally of course need to try to could fail that gosh fun building the speed yet.
Ebix went into Corbett 19.
Linking it was extremely well prepared to handle the impact of call that 19, but then in another few weeks I realized that goal that 19, but becoming a tsunami as one country. After another decided to shut dive.
And not a country down by declaring complete shutdowns schools, what shot across the world along with all the travel airport businesses like et cetera, we could see that the impact of gold at 19 was unavoidable in certain areas like onsite consulting travel foreign exchange remittance and even.
He learning.
Our schools was shot international students, what told not to travel hurting a piece off our educational remittance business.
Airports, so completely shut no travel well see the bill from almost any country and schools were trying to conserve their spending even on E learning on force majeure grounds typically in crisis situations.
We see a solid your money flowing in from it but expats and migrant labor as stood at home country to help their parents and loved month. However, this time of the didn't have a different as Mike had either being followed or just had no access.
<unk> Western Union Moneygram lottery outlet, we'll be able to transmit money considering the locked down.
Also Golden 19 resulted in U.S. dollar growing a lot stronger as compared to guidance seems like the Australian dollar British pounds, but really in reality Indian rupee et cetera, I strengthening U.S. dollar then still hard Ebix as we report all international dissolves in U.S. dollar.
Australian dollar became weaker by almost 14% in the quarter by the Brazilian real.
Yep.
Then down by approximately 25% in constant currency, Tom It had an impact of U.S. dollar sleep and 7 million on a worldwide revenues for the quarter.
All of this impacted our results in the month month, a much 2020 <unk>.
Considering all of this I'm quite pleased that we added porting that they'll sturdy that stand out in terms of profitability cash flows and even revenues considering the times we got in.
We had to make lots of stuff employee related decisions, especially in areas effected by Colgate 19.
We also had to decide how to keep our client fully functional and keep our technology employees fully functional from their homes.
I want to IP and administration drops worldwide fastest S fastest testing time with flying colors, they've been able to keep all I find some systems fully functional bid zero downtime I'm very thankful to our staff across to low.
It's showing diamond again, why Ebix has such high customer retention and as to how ebix tends to step up each time a crisis. The question situation has to be dealt with bought our clients.
We got that cost in many areas.
We renegotiated many cost related agreements.
And decided to concentrate on revenue sources that are less impacted by call. It 19.
All of that effort was targeted I've been showing that ebix continues to be nicely profitable.
And cash flow positive even building just trying to pull that 19 PDL.
I'm, a b to B backend an exchange operations for the most spot continued to do well, Australia reported a record quarter in terms of revenue in local currency dumps.
Brazil, UK, Singapore and news Atlanta.
But all strong in local currency dumps, we signed a number of deals in the first quarter of 2000 and plenty in India with financial institutions in international markets.
In the 80 off Ebix cash financial technologies.
Got you end up India has declared that they plan to open Indiana's locked down gradually beginning may 18th.
That is clearly welcome news from our perspective as little as it will immediately start showing some results in our remittance business. It seems that travel is also being open on the same day and if that happens our traveling foreign exchange Grps should start looking that way back up.
But the schools being closed we have seen that day that increased demand for E learning apps plus students that allow schools to let children study from home life schools, and bad and get to monetize their progress on a daily bases online accordingly.
In this covert beat it we have changed the focus off our E learning sales steam from pursuing classroom based E learning right.
Provided by teachers to South E learning solutions, plus student so that they can study at home itself.
In each business area, we have made similar adjustments to our sales processes and product priorities.
Data and Steve Nash discussed the quarterly numbers. So I'll now discuss those numbers, but just say that I'm pleased with that overall performance. I'm also pleased that we have continued to focus on cash collections and gas generation activities during the speed it.
Leading to our president cash and cash equivalents rising to approximately $115 million ads on date, including restricted cash.
We have a number of key initiatives that'd be a presently but ceiling beyond what ash has already talked about.
A multimillion dollar agreement in hand for you lay yet ports products count does.
I try Max bus 16 acquisition of water to Ebix, a few days back, which we expect to generate 30% to 35% EBITDA.
A number of large ticket deals in the bus exchange arena across multiple states in India.
A few inorganic opportunities that could be nicely at retail.
Direct to consumer exchange joint venture opportunity in the United States.
Recently, the ports in India awarded the Primex acquisition to US we had requested the ports.
To allow us to put a chance timex on 100% liability free basis I'm pleased to report that the quotes accepted our request and wanted us try amex, but no liability is attached to the acquisition.
Try mix has a strong but I listened to bust exchange arena in 18 States of India today and had barely started cutting revenue stream with each bus tickets, which.
And has been getting revenue stream, which is linked to a transaction to a steady transaction flow from each bus ticket sale.
In each of these states.
After the gods Yep.
Acquisition. The merger agreement contains southern termination rights for Ebix on Yapta, including among others. The write up either party to dominate the merger agreement. If the module has not been guns human guns, you made it on a prior.
Do they extended date on May four 2020 as enough now the outside date has not been for the extended.
With regards to what IPO plans for Ebix cash, we think that it is prudent to let the Corbett 19 crisis blow LER and let the markets normalize before we launch out ideal.
Accordingly, we intend to work closely with all our investment bankers to the speed, yet and keep up sells in the ready mode for the IPO wildly wait for the spend that make the boss.
In terms of acquisitions, Boston, but then on Friday that absolutely Glenn.
We have three key financial goals one.
Minimize any this for ebix in terms of any additional that overhang.
To.
Make acquisitions that can be nicely accretive in the shock them for a shareholder even.
Even if we are using stock at an instrument up a chance we will still tried to construct dumps that can delay I'd dilution ideally for many years.
Three target companies that can get us near the 30% a higher EBITDA number.
We have a number of strategic acquisition opportunities that fit into these three criteria, but rest assured.
Those are the only months that'd be pursuing today.
Lastly, let me give you my perspective on covert 19 at a more philosophical level.
I believe that each business professionals, including you and me needs to really look at the two possibilities coming out of covert 19, one is the pessimistic pessimistic possibility.
That go in 19 will continue to impact our lives that I believe for very long time and does we need to really just think of today. It all the intermodal.
The optimistic on I'd prefer to call. It opportunistic possibility is that over 19, they'll sooner or later blower and we need to use the time to make our businesses Lena focus on the fundamentals and pursue certain strategic opportunities that many of us shy away from at Brad.
And that's could be bought for a steel.
My Tony is that if we have to be pessimists, then vivus started meaning lives thinking we'll look at all we might have I'll just keep I loved ones closed a lot of cells and then start living our remaining life enjoying what got us given up till now for good or bad I'm not one of those.
I prefer to be.
An optimist on as I called myself, an opportunistic who wants to see the present time as a lesson in prudent behavior and also an opportune time to differentiate months company from the hard by pursuing opportunities that other than scared off and reach and by Recalibrating Your vision and strategy.
The big advantage of the times, we out in.
Go over 19 has done do things in my view one it has leveled the ground.
And to have stock each one of fast the value of creating systems that allow companies to reduce their physical offices drastically and allow companies to work from home.
What do I mean by leveling that down.
Before covert 19.
There are many companies that in the name of organic growth, what continually burning cash and subsidizing their customers and does winning business by just losing money each and every day they about doing that.
But the backing a megawatt private equity groups and financial institutions, who believed that it was okay to lose money as they could hype up the company valuation based on pure revenue growth.
And show huge gains based on this way, but if we had evaluation backed by investing back investment Bank of studies Golden 19 thought each one of these b E and institutions are little bit up a lesson as now they had to mop found that investment book losses, and suddenly become accountable to do that investors.
Done.
They have started pushing the companies they invested in the stop the bond rate and become profitable.
That's a great development from our perspective as they will now we at times, we're fighting alone battle in I industry competing against players, who just through the wrong way by subsidizing their sales.
I call it leveling the down as now there's a better possibility that all of US we'll be competing on real Matt, it's rather than growing just by losing money.
With respect to working from home, we're presently doing a worldwide reviewed to see whether by the end of 2021, we can have at least 40% up our employees functioning from home and by the end up 2020 do have 60% of what employees working from home.
But that it brings me to the end up my talk I'll now hand, it over back to the operator, we'll open it up for questions. Thank you.
At this time, if he would like to asking question. Please press Star then the number one on your telephone keypad I can't start than the number one.
Your first question comes from the line, Jeff then rain.
Great. Thanks for taking my questions guys and welcome Steve Great to break that down here and look forward working with you.
Robin maybe at a high level, and then I want to dig down a little more precisely but.
Most interested and changes in behavior long term because of Colvin. We've seen this in some of that other companies and other spaces. It's fundamentally change the way people view certain aspects of life work work remotes and you can think of a lot of things are clear long term beneficiaries. When you look at your business and you look at your you used the phrase vigital write a combination digital.
Physical presence has this has the presence of Cowen, particularly lakes, the Scotch business accelerated the transition to more of a digital approach and clearly physical locked down but just what do you see is the long term lasting impacts, particularly with respect the digital and physical aspects.
Thanks step up so let me go about it and that it was halted I've already talked about obviously the leveling the dominant book from home side, just kinda partly answered your question during my talk but coming back to your question regarding for digital versus digital remember that though the fitted told means we have always been digit though that we are taking.
I think I'll establishment and converting them into digital now I still believe that.
While nothing stops us from being you being as they did the last we want want it to be today. When I first single biggest sent says we are sitting in the last mile in every corner of the country.
That bite south look meaning it ultimately we had we ended up in a situation where they were confuse imports.
If that if that government had even allowed people to walk even goal.
Hundred meter the way you know ought to go a half a mile away you would have basically that's how ebix gosh outlets odd that somebody that it's it's an unforeseen media that we have seen the I would hope that don't happen again in thumbs up you're not going to see a BDC. We had even if people stop wanting to go out you're not you're right.
Only going to see a period, where it's got a few that imposed I think it's got fuel that being imposed all too then we won't have a life. So I would I wouldn't base my business model on the fact that people can even walk for hop on my or they could take their weight going go half a mile away at the same time remember I want to send pay is really job growth.
Ryan in any man out that the client wants to reach US we're not full forcing people to just do a fit your total transaction. We are digit though we had available all of the cloud we had available on foreign devices that are available on any any handheld device that the consumer is yielding auto business. It using so remember that.
Even from a business perspective, we on one side have b to B products, where didn't get following the technology, our Bakken providers, whether it is it all the traditional leave its businesses or whether it is that ebix gas BW businesses, where do we provide the technology, but on the front end side.
If you we are reaching out to a lot of folks through everybody manner that we can reach out lot people, whether if you're going to be at an airport, we're going to be there if you're going to be added duty free shops, we had a bad if you go to a bank remember that when we say ebix cash outlet one other thing sometimes people get confused with either.
For example, we have 50 pounds and bank branches at all about outlets.
So these are bank institutions, where people are going to go we're not still at the time point of time, where people are going to only be doing digital E banking transactions and even if they do that.
You know we have all their relationships with these banks to be able to handle that transaction. So I'm not being they did though is an add on.
Its ease of working something that provide either looking to the consumer at the same time, it's not the only baby book, we work through any any particular way that we can reach out to the business to the can do more to the franchisee to the Bakken business and so on.
Oh, great sorry go ahead.
So my that's great.
That said from I think.
Thank you so from my perspective, Jeff It as the covert 19 as I talked through my talk it hasn't levels are grounded in many ways and I caught underemphasize Oh I can stop talking about it simply because it is one area where people have gone crazy in films off subsidizing their customers and.
Good day that ability to subsidize their pipeline, partly has been taken away because financial institutions. The private equity groups I'm not willing to support them to that they're getting what it does also thought that says you need to have system over the cloud.
A lot of these businesses.
I've seen a distribution businesses, they don't leverage technology as well as we do better on the cloud business everything we do for us.
Being hsas are being available anytime anyplace anywhere this Johnny started in 2001, Weve assassin able in 2000 or one for us to be going being available or what are the cloud either way of life and today that gives us an edge. So when our employees are moving home for example, we went out.
Because we have security systems companies want it was very difficult for them to move systems back home. Because now you have to provide a secured a means of doing that business, which is acceptable to do your end client and that doesn't happen overnight you need to be prepared and this is where we have always been in a way.
We have always been you know.
SAS enable we've always been all what are the cloud and in a way that made us ready for crisis situations like this.
Makes sense, so maybe just to jump in a little more specifically then robin obviously.
It's a pretty dynamic environment, nothing and virtually anybody he's been in to this degree before when you look street ex cash business and I know you've done a lot of stress testing with respect to how each of the revenue lines behave two questions. There one how do you think about a floor I mean, assuming June is it somewhere.
In June we start to emerge from lock down you'll you'll immediately get incremental revenues from travel and rubinson Forex. So so assuming the June quarters before how do you think about a worst case scenario for June quarter Ebix cash at this point.
That's a very hard question to answer and I hesitate to give you a reply on this because it's a it's an impossible question at this time to answer because school, where it is and that they majid see it might be a mode question because as I as I said to have a dumb enough, India just announced in the last half an hour that they're opening cranes beginning tomorrow.
That opening airlines begin to get beans, so it might be a moot question personally because like it's very hard for me to predict anything from that perspective, and Oh into travel all foreign exchange side of the business for June for example, I think we'll have to wait and watch how this really opened its about no.
The simple fact sat out of simple that anything that is technology oriented is a lump business for us.
The business is aware, which get impacted by cool that in Ebix cash I'm going to be travel is gonna be Forex is gonna be remittance I, Let me tell you the trends in each one of these.
So let me get done business went down quite sizably in the month up in March and April bought Montana put overbought edible simply because one of the key drivers over time. It does business isn't migrants labourers, sending money, mostly from the middle East back to India.
And lot of these migrant labors were either from Florida or didn't have enough money to send and even if they had the money. There was no outlet. They could go too and then not technology savvy in any case, so having said that and bought the gut feel what on both sides. So that business got impacted but then I'll also walk you through in the last.
In the last one and a half weeks, we have seen remittance business continually keep increasing beginning.
May Todd beginning made card as government of India declared it other essential service the remittance business and allowed old establishments to open a we have seen a remarkable improvement in that business. So we bid with the festival of eat approaching when do the Big Festival for the Muslim community.
The normally in may tends to be a very high month for remittances purely because of the festival of either money is lots of money comes into India from you know from these people sending it.
From money being sent across my migrant labors and by people across the world, especially in the system community. So we expect May and June just started coming up pretty sizably, it's very hard to predict what that number will be but I mean, there's been nothing definitely looking up wouldn't be going into the travel and fortyx businesses, you're basically saying traveling phonics businesses.
Could be as you know if hypothetically if there was no business in in June then you would have needle business. If there is no no travel in June then you'll have zero revenues from coming out from travel and you will still have some photonics revenue coming out of stuff like education, though it it will also get partly impacted.
Purely because of the fact that if schooled on opening and the UK International students are being no told do not come in they will accordingly delay their fees. So so look it's very it's a it's an evolving situation and I can just save one simple thing overall that what that well the if I had to do a stress analysis.
I would say, what's the worst case scenario I don't see ebix, losing money in a quarter I think ebix will still be solidly positive overall, I think you're not going to see us even from India perspective, you're not going to see us with a hole in our financials in India.
And what does that translate into from a revenue perspective, that's a little bit difficult land. So because it's a it's a very evolving my business right now because of call. It.
Okay.
Sure enough and then maybe I can just a shift over to the North American business. I guess this is for you run a rash. If you if you look at the North American side I guess, just two questions.
This large distributor when I think actually said it would turn to revenue later in the year. Just curious if that is the original timeline for that deal or was that expected to be revenue considerably sooner.
You know pre cold and then also as it relates to the North American business sounds like I mean, certainly you've got a very long history on that side of the business of stickiness and understanding churn and how that business behaves in downturn. So same question there that I ask the on the mix Josh side, you have a sense of where that bottoms in June if the June is the bottom and just trying to.
Walk me through snip sort of how to think about that sequentially two questions. There.
So I think I'll, let ash on so this in terms of details.
All I will tell you at this minute is that a we're very pleased with this distribute a we we think it's going on faster than what we taught and <unk> ash Asheville and put it in more detail. It's one of the largest banks and the in the world on in the country. We're not like not allowed to give their name said the lifetime Vitol disclose their name. This is one of the largest deals.
We have happened to that said in the market.
Because of the network they bring with that but ash. Please go ahead and answer that.
Yeah, I know, you're absolutely right [noise], Robyn and I would say overall or the plan was what's probably accelerated.
For the reasons I mentioned in my talk you know companies that are largely relying on manual processes.
Or are very quickly looking at their projects and trying to digitize their end to end process.
Getting such a large distributor and along with them a big network of you know carriers bolt on the annuity and life side, It's a pretty significant initiative and you know we've got some pretty aggressive timelines and those timelines have been.
I have been accelerated actually.
Are you could just to put a finer point on the numbers. Let me just are you able to put any bounce around how big that transaction can be theory on an annual basis, and then just back to the other sort of June revenue picture versus virtually anything you can offer with respect to how this business behaves sequentially or where it bottoms.
So John Paul I will just sorry.
Ask go ahead may all I was going to say about that.
And as you can expand on it see it'll be a multimillion dollar deal a annually how many millions I headed the right and I'll give you a.
Simple number out there out of seven or eight a friend of services involved in this itself complete straight through processing solution and a at this point for us to detail it though wouldn't be light and it's hard to guide you know once again, there will be stages to it.
On one stage to it there.
Just doing the professional services are getting them up and running then the second step off it is the the transaction volume that's a cutting business that ebix is famous for and both these on both sides you're going to see multimillion dollar amounts flow I ask you can add to it whatever else.
Thanks, Robin no absolutely that.
You know that the scope of what we're doing here is pretty broad grade so even with and a new piece for example wouldn't be supporting core transactions will be actually supporting data.
You know, what we call EM business, which as you know poster show all the administrative transactions that flow through the system.
We have you know our coating capabilities embedded in here, we have our agency management.
On the life side, you know, it's going to support both proprietary products as well as.
Off the shelf products. So the scope is is very large it's gonna be very significant but like Robin said, it's hard to sort of you know put a number two it as we speak to work has started.
In terms of the planning and transition and it takes you know a student three quarters to onboard a large distributor and like Robin said you know once they're on boarded then we start to see that transaction flow you.
You know coming in.
Yeah, Yeah, Oh, great Congrats to you action that.
The team there in North America sounds like a.
One of the biggest maybe the big swing in a long long time for the space just two other questions and I'll jump off if anybody else lives as question.
Robin on the train actually just refresh us what the transaction with the purchase price is expected revenues when do those revenues.
Flow and then any other incremental color on Yachter I mean, I guess I hear you sort of left the transaction.
It hasn't closed by the the yes, I guess expected. They can you let it lapse of any other color you can give us there.
Suspicion of how to think about Yachter and the potential combination. So I guess two last questions Sir.
Thank you. So let me first talk about try mix from a try mix perspective. This is the bus exchange acquisition. So what they primarily due time extra lights solutions, but then a bus and at a bus dippel. So for example, if you go into a bus you you will you then ebix cash smartcard, you lived that Ebix Guy smartcard and pay for.
Pick at using foam, they're using the device that sitting in the boss that bus that device will also count a there are other devices in a bust that will say a that Tony passengers for example, sitting in the boss <unk> and the bus dippel online, but no. Let's say only 29 I bought tickets and one person hadn't bought ticket and so on so many online.
It's a complete traffic control system and the eight ticketing system and so on so every time would pick up that sold or bought any bad we make our money on every pick it what Chile and these they have around 18 states already have their clients are across the country and I remember that 28 states in India.
So they had a dominant player in that business, if somebody that cutting business.
When we wouldn't be their due diligence on them.
Basically.
The revenue line that we taught that it would come to will be anywhere goals are to between 25 and $30 million a in revenue a in it but that dumps they've been around 35% modules that we could see Oh, we paid basically less than $10 million at the current dollar late at so I'd.
I would have said 10 million, but now it is more like 9 million because it got them see has Indian currency has devalued Ah so that put a change how best So we're gonna bad on 9 million for the purchase at the part of the positive you also out in how to think 150000 scan for building a in Delhi, ER, which we have.
Based price that'd be satellite, we give them only up to that base price and if we get more than that or do we decide to keep that building. That's odd. So we have that's the add on to that specifics of that we see that at a very lucrative acquisition because we are today in the mid stuff.
Very large deals, but I'd say very large I can give you a definition what I mean by that as you see anytime you get a deal which is about 10 million up but we consider that lodge and basically we have monetize multiple deals in various states that range between.
A little side will be between 10 to 15 million and sometimes can go as high as 35 and $40 million and these are we wouldn't have been able to bid on those deals. If we didn't have that technology that treatments provides us. So we see this has a very agreed to and a sensible acquisition.
So that's about climax.
The ports basically shoot and harder on May four and sold via booking now with the court process that we have to follow and we are right now working with the court appointed resolution professionals to follow on effects coming back to yacht that I've already said that basically a wee expiry date wasn't made for.
The day it hasn't been extended as yet I can't talk more about yacht that simply because you know we.
What that what are the next announcement is a wheel well announce it had the lifetime what that one of the announcement is Oh, we out of high highly limited about what we can say at this minute because that attorneys and we got to follow the confidentiality and the processes that we have to do between the both sides I can only value rest assured that we.
I want to put we will always want to protect shareholder rights in anything we do whether it'd be up it off and that it does anything else as I do find my Threeq idea for any acquisition look they fit in in any got any category and we would we we were very focused on our investor interest and I go to now.
So more than that at this point a dime.
Okay, Great I'll leave it there thanks guys.
Thank you.
And again that starts and the number one on your telephone keypad, if he would like to asking question.
And there no further questions at this time.
And I'm sorry, you have a question on the phone line.
From Joel filling fast.
Okay can you talk about Oh your balance sheet comfort you know a lot of this are concerned about the.
Current cap level.
Sort of patchy financing environment that we've got tend to upgrade their choice blow up the balance sheet with acquisitions.
So July let Steve answer this but before he does that I want to plus default or you know I want to thank you for all the support that you've given us over the years I have to do and I am pleased on it that your Youre or you are part of this call. Let Steve. Please go ahead and I'll answer this question.
[noise] there's still.
Good morning.
So couple comments I'll make one you know I mentioned that we amended our senior secured credit facility and we feel like that was a prudent.
Action on our part it's important and we got great support from our bank.
To provide us some flexibility for the unknown, which is in spending.
So we feel good about kind of where are the terms of that credit facility or today that that amendment close last week.
And then as I mentioned and my prepared remarks, you are available funds and access to US today is close to write gotten worse right at $100 million at March 31st if you looked at today.
I want to say that number was closer to $115 million, we've got substantial cash resources at our hands and we're generating positive cash flow is we illustrated with the almost $30 million of operating cash flows in the first quarter now where our operating under a substantial uncertainty with cobot 19, but we've also.
We've done some forecasting that's that's you know.
Where weve sensitize kind of what what is and right now I think as Robin said, we feel confident that we're going to we're going to make it through this next quarter.
Generating positive and palm.
And in our operating income in net income so.
Right now as we see the world today, we feel comfortable not only with our flexibility under our primary debt facility, but also with the cash you have on hand, and our operating cash flows.
So so Joel I'm just to add to what Steve just said, we we feel that as we look at some of the new or inorganic opportunities.
We feel we have the means do generate money for those even if those are.
Beyond where we are today, we we feel when you have if you make sensible acquisitions, which can generate high amount of cash flows. They don't waves to fund those without causing increased that done the company I wouldn't go into more detail beyond this but we have heavy and.
List from all kinds of parties, who would like to team up with us. So would like do you know you get involved with instruments that are absolutely not that didn't than say auto not dilution a intensive.
But can provide enough ammunition to the company, if we needed that ammunition to make a larger size acquisition.
Thank you.
Thank you.
And there no further questions at this time.
Since we don't have any further questions or Ivan close the call and thanks, everyone for participating in this call. It we look forward to speaking to each one a few during the second quarter investor call. Thank you.
This concludes today's conference call you may now disconnect.