Q3 2024 Exela Technologies Inc Earnings Call
Good day and welcome to the seller third quarter 2024 financial results.
Unknown Executive: Good day and welcome to the Exela third quarter 2024 financial results. All participants will be in listen-only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by zero.
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Unknown Executive: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded.
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David Shamus: I would now like to turn the conference over to David Shamus, President of Investor Relations. Please go ahead.
Speaker Change: Now like to turn the conference over to David Shamus President of Investor Relations. Please go ahead.
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Speaker Change: Yes.
We have rejoined the presenters. Please proceed.
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Unknown Executive: Thank you, operator and good afternoon.
Speaker Change: Thank you operator, and good afternoon, welcome to our earnings call to discuss our third quarter results for the period ended September 32024.
Unknown Executive: Welcome to our earnings call to discuss our third quarter results for the period ended September 30, 2024. Our presentation has been posted to the IR section of our website.
Speaker Change: A presentation has been posted to the IR section of our website.
Matthew Brown: On today's call will 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.
Speaker Change: On 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 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 it over the call to Matt.
Matt Brown: So with that I'll turn it over the call to Matt.
Matt Brown: Thanks, David and good afternoon, everyone, let's start on slide eight financial highlights we reported third quarter revenues of $269 2 million up six 3% year over year.
Matthew Brown: Thanks, David.
Matthew Brown: Good afternoon, everyone. Let's start on slide eight, financial highlights. We've reported third quarter revenues of 269.2 million up 6.3% year over year. Information and transaction processing solutions increased by 11.5% year over year, while healthcare solutions and legal and loss prevention services declined by 5.3% and 2.4% year over year, respectively. Sequentially, Q3 was up 22.4% in ITPS, primarily driven by a large project from an existing customer, while down 6.7% in healthcare solutions, and down 28.8% in LLPS due to project fluctuations. Q3 gross margins were 20.2%, down 330 basis points sequentially, and 140 basis points year-over-year, primarily due to higher postage costs in the quarter.
Matt Brown: Information and transaction processing solutions increased by 11, 5% year over year, while health care solutions, and legal and loss prevention services declined by five 3% and 2.4% year over year, respectively.
Matt Brown: Sequentially Q3 was up 22, 4% and 90 P. S primarily driven by a large project from an existing customer while down six 7% in health care solutions, and down 28, 8% and L. L. P. S due to project fluctuations.
Matt Brown: Q3, gross margins were 22% down 330 basis points sequentially, and 140 basis points year over year, primarily due to higher postage costs in the quarter.
Matt Brown: L O P. S margins were down approximately 1000 basis points, while I T. P. S margin was down 100 basis points and healthcare margin was up 160 basis points.
Matthew Brown: LPS margins were down approximately 1000 basis points while ITPS margin was down 100 basis points and healthcare margin was up 160 basis points. SG&A was down about 1% year-over-year and 16% sequentially, driven by reductions in legal and professional fees as well as employee-related costs. We're continuing to make investments in new business divisions such as Reactor.ai and shifting from CapEx to OpEx as we move our data center infrastructure to the cloud. Year to date, we've consolidated over 300,000 square feet of real estate and have approximately 65,000 square feet of additional consolidations in process for the fourth quarter.
Matt Brown: SG&A was down about 1% year over year, and 16% sequentially driven by reductions in legal and professional fees as well as employee related costs.
Matt Brown: We're continuing to make investments in new business divisions, such as reactor dot AI and shifting from Capex to Opex as we move our datacenter infrastructure to the cloud.
Matt Brown: Year to date, we've consolidated over 300000 square feet of real estate and have approximately 65000 square feet of additional consolidations and process for the fourth quarter.
Matthew Brown: We have made good progress on savings initiatives and still have significant opportunities for margin improvement throughout the rest of the year. We had a net loss of $24.9 million, an improvement of $2 million sequentially. Adjusted EBITDA was $14.6 million. In terms of highlights, we achieved solid revenue growth and 6.7% sequential improvement in our adjusted EBITDA. We also renewed over $113 million of TCB in the quarter. We are seeing growth opportunities with approximately 40 million of new ACV1 in the quarter and 81 new logos added. Our cash flow from operations also continues to improve with 5 million of positive cash flow from operating in Q3.
Matt Brown: We have made good progress on savings initiatives and still have significant opportunities for margin improvement throughout the rest of the year.
Matt Brown: We had a net loss of $24 9 million, an improvement of 2 million sequentially adjust.
Matt Brown: Adjusted EBITDA was $14 6 million.
Matt Brown: In terms of highlights we achieved solid revenue growth and six 7% sequential improvement in our adjusted EBITDA. We also renewed over $113 million in PCB in the quarter.
Matt Brown: We are seeing growth opportunities with approximately $40 million of new ACD, one in the quarter and 81, new logos added our cash flow from operations also continues to improve with 5 million of positive cash flow from operating in Q3.
Matt Brown: In terms of low lights et cetera was delisted from NASDAQ earlier this month due to failure to meet the exchanges $35 million market cap minimum requirement for 30 consecutive business days.
Matthew Brown: In terms of lowlights, Exela was delisted from NASDAQ earlier this month due to failure to meet the exchange's $35 million market cap minimum requirement for 30 consecutive business days. We will continue operating on a business as usual basis with no disruption to our operations or financials. Our focus for the rest of the year is to continue growing revenue, increase gross margin, and strategic growth initiatives. We are optimistic about achieving many of our objectives this year as we continue to focus on improving profitability and liquidity.
Matt Brown: We will continue operating on a business as usual basis with no disruption to our operations or financials.
Matt Brown: Our focus for the rest of the year is to continue growing revenue increased gross margin and strategic growth initiatives. We are optimistic about achieving many of our objectives. This year as we continue to focus on improving profitability and liquidity.
Unknown Executive: Thank you, and we will now open the line up for questions. We will now begin taking questions and answers. If you have a question, please press star and then one. Our first question.
Thank you and we will now open the lineup for questions.
Matt Brown: We will now.
Matt Brown: Again, taking question and answers.
Matt Brown: Right.
If you have a question. Please press star and then one.
Speaker Change: Alright first question.
Matt Brown: We'll pause for a moment to assemble our roster.
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Matt Brown: A question. This concludes our question and answer session.
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Thank you for attending today's presentation you may now disconnect.
Unknown Executive: Thank you for attending today's presentation, you may now disconnect.
Matt Brown: Okay.
Matt Brown: Yes.
Yes.
Sure.