Q2 2024 Exela Technologies Inc Earnings Call

Speaker Change: [inaudible] Matthew Brown, Matthew Brown,

Speaker Change: i

Speaker Change: Today and welcome to the excellent technology second quarter 2024 earnings conference call. All participants will be in listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After today's presentation, there will be an opportunity to ask questions, to ask a question, you may press star, then one on a touchstone phone. To withdraw your question, please press star, then two.

Speaker Change: Please note, this event is being recorded. I would now like to turn the conference over to David Chamez, Vice President of Investigation. Please go ahead.

David Chamez: Thank you, operator and good afternoon. Welcome to our earnings call to discuss our second quarter results for the period and the June 30th, 2024.

Speaker Change: Our presentation has been posted to the IR section of our website.

Speaker Change: Today's call will be Matt Brown, our interim Chief Financial Officer.

Speaker Change: Some of the matters we will discuss on today's call are forward-looking and involve a number of risks on certainties and other factors that could cause actual results to differ materially from those in such forward-looking statements.

Matt Brown: Such risks and uncertainties are set forth in our presentation, so with that I'll turn over the call to Matt.

Matt Brown: Thanks David. Good afternoon everyone. Let's start on slide seven with earnings highlights.

Matt Brown: We reported 2nd quarter-reven is a 245.7 million, down 10% year over year, or 9.3% pro-former for the sale of the high-speed scanner business.

Speaker Change: The year of the crime was primarily due to 2023 non-ronoals, including the large contract who discussed last quarter.

Speaker Change: Sequentially, Redden is a client by 5.1%, mostly driven by project fluctuations and volume season healthy.

Speaker Change: As we continue to focus on driving efficiencies and cost reductions, our margin continued to increase with Q2 gross margins had 23.5% of the 120 basis points a year, and 150 basis points sequentially.

Speaker Change: K2 adjusted EBITDA, which is 13.7 million, but included a 10.1 million right down, predominantly driven by a partner contracting amendment, which provides for higher pricing and service expansion, but resulted in a non-cached right down the original contract assets.

Speaker Change: Our net loss improved by 4,000,000 this quarter and we continue to focus on driving incremental savings.

Speaker Change: We have over 25 million of annualized savings in process and we are executing daily an optimization of our infrastructure technology and operational leverage.

Speaker Change: Moving on to AJ, at the segment level, information and transaction processing solutions declined by 15.2% year every year and 11% sequentially.

Speaker Change: The year of a year to climb was primarily driven by the sales scammer business, lower a near-revenous and a 2023 non-reduals discussed previously.

Speaker Change: to questionfully the draft is mostly due to project fluctuations in seasonality.

Speaker Change: Health Care Solutions declined by 1.1% year of year and 2.9% to coincidentally, driven by the June amendment to the partner contract mentioned.

Speaker Change: Legal and lost prevention services grew by 6.3% the year of a year and 45% sequentially with a strong market and large settlement distributions.

Speaker Change: In terms of margins, we continue to see improvements in healthcare solutions with the 630 basis points gain year every year, as we implement the additional technology features and achieved savings wealth through.

Speaker Change: I keep the S margins declined by 170 basis points of year for year in the lower revenue, and LLPS margins are of 140 basis points of year for year with the operational leverage of the sediment administration projects.

Speaker Change: Well, that she in a was a 30.5% year of a year.

Speaker Change: It includes 10.1 million in right-downs and Q2 FY23 included the 6.6 million gain on the sale of our high-speed scanner business.

Speaker Change: Excluding the guidance, our SGNA was down approximately 18% year over year, driven by reductions in legal and professional feed, as well as employee related cops.

Speaker Change: Moving on to page 9.

Speaker Change: In terms of highlights and highlights, we achieved gross margin improvement despite a number of headwins.

Speaker Change: We had a few lost renewals, but we are expanding growth opportunities with over 40 million of new ACV1 in the quarter, and increase to 50% to 20% and 119 new logos added, and increase to 40% to 20%.

Speaker Change: We ended quarter with over 30 million in unrestricted cash and made our semi-annual interest payment. We continue to focus on extending liquidity and cash flow from operations continues to improve with over 12 million of positive operating cash flow in the quarter.

Speaker Change: Our focus for the back half of the year remains in driving revenue stabilization, continued margin improvement that strategic growth initiatives.

Speaker Change: Thank you, we will now open the line of precautions.

Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your hands before pressing the keys to withdraw your question. Please press star then two.

Speaker Change: i

Speaker Change: Once again, if you have a question, please press star, then one.

Speaker Change: i

Speaker Change: There are no more questions, no questions, this concludes the conference. Call for today. Thank you for attending today's presentation. You may now disconnect.

Operator: Today, and welcome to the Exela Technology second quarter, 2024, earning conference call. All participants will be in listen, only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchstone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded.

David Chavez: I would now like to turn the conference over to David Chavez, vice president of investor relations. Please go ahead. Thank you, operator and good afternoon. Welcome to our earnings call to discuss our second quarter results for the period ended June 30th, 2024. Our presentation has been posted to the IR section of our website.

David Chavez: On today's call, we'll be Matt Brown, our interim chief financial officer. Some of the matters we will discuss on today's call are forward looking and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those in such forward looking statements. Such risks and uncertainties are set forth in our presentation.

Matthew Brown: So with that, I'll turn over the call to Matt. Thanks, David. Good afternoon, everyone.

Matthew Brown: Let's start on slide 7 with earnings highlights. We reported second quarter revenues to 245.7 million. Down 10% year-to-year, or 9.3% pro forma for the sale of the high-speed scanner business.

Matthew Brown: Year-to-year decline was primarily due to 2023 non-renewals, including the large contract we discussed last quarter. Sequentially, revenue declined by 5.1%, mostly driven by project fluctuations and volume season housing.

Matthew Brown: As you continue to focus on driving efficiencies and cost reductions, our margin continued to increase with Q2 gross margins at 23.5% at 120 basis points a year of a year, and 150 basis points sequentially. Q2 adjusted EBITDA was 13.7 million, but included a 10.1 million right down, predominantly driven by a partner contract amendment, which provides for higher pricing and service expansion, but resulted in a non-cash right down the original contract assets.

Matthew Brown: Our net loss improved by 4 million in this quarter, and we continued to focus on driving incremental savings. We have over 25 million of annualized savings in process, and we are executing daily an optimization of our infrastructure, technology, and operational leverage.

Matthew Brown: Moving on to AJ. At the segment level, information and transaction processing solutions declined by 15.2% year-to-year and 11% sequentially. Year-to-year decline was primarily driven by the sale of scammer business, lower media revenues, and the 2023 number noils discussed previously.

Matthew Brown: Sequentially, the drop is mostly due to project fluctuations in season housing. Healthcare solutions declined by 1.1% year-to-year and 2.9% sequentially, driven by the June amendment to the partner contract mentioned. Legal and loss prevention services grew by 6.3%, year-to-year and 45% sequentially with the strong market and large settlement distributions. In terms of margins, we continue to see improvements in healthcare solutions with the 630 basis points gained year-to-year, as we implemented additional technology features and achieved savings flow through. IKPS margins declined by 170 basis points a year-to-year and the lower revenue, and LLPS margins are of 140 basis points a year-to-year with the operational leverage of this element administration project.

Matthew Brown: While SGNA was up 30.5% year-over-year, it includes 10.1 million in write-downs and Q2 FY23 included the 6.6 million gain on the sale of our high-speed scanner business. Excluding these items, our SGNA was down approximately 18% year-over-year driven by reductions in legal and professional fees as well as employee-related costs.

Matthew Brown: Moving on to page 9. In terms of highlights and led lights, we achieved gross margin improvement despite a number of headwinds.

Matthew Brown: We had a few lost renewals, but we are expanding growth opportunities with over 40 million of new ACV-1 in the quarter, and increase to 50% sequentially, and 119 new logos added, and increase to 40% sequentially.

Matthew Brown: We ended the quarter with over 30 million in unrestricted cash and made our semi-annual interest payment. We continued to focus on expanding the liquidity and cash flow from operations continues to improve with over 12 million of positive operating cash flow in the quarter.

Matthew Brown: Our focus for the back half of the year remains in driving revenue stabilization, continue margin improvement, and strategic growth initiatives.

Matthew Brown: Thank you.

Matthew Brown: We will now open the line for questions. Thank you.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys to withdraw your question. Please press star, then two. Once again, if you have a question, please press star, then one.

Operator: Since there are no more questions, this concludes the conference call for today. Thank you for attending today's presentation.

Operator: You may now disconnect. [inaudible]