WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global Business Process Outsourcing (BPO) services, today announced
results for the 2014 fiscal first quarter ended June 30, 2013.
Highlights – Fiscal First Quarter 2014:
GAAP Financials
- Revenue of $122.1 million, up 13.3% from $107.8 million in
Q1 of last year and up 2.5% from $119.2 million last
quarter
- Profit of $6.7 million, compared to $2.8 million in Q1 of
last year and $8.2 million last quarter
- Diluted earnings per ADS of $0.13, compared to $0.06 in Q1
of last year and $0.16 last quarter
Non-GAAP Financial
Measures*
- Revenue less repair payments of $113.8 million, up 10.9%
from $102.6 million in Q1 of last year and up 0.9% from $112.8
million last quarter
- Adjusted Net Income (ANI) of $14.4 million, compared to
$11.1 million in Q1 of last year and $15.8 million last
quarter
- Adjusted diluted earnings per ADS of $0.28, compared to
$0.22 in Q1 of last year and $0.30 last quarter
Other Metrics
- Added 6 new clients in the quarter, expanded 14 existing
relationships
- Days sales outstanding (DSO) at 31 days
- Global headcount of 26,178 as of June 30, 2013
Reconciliations of the non-GAAP financial measures discussed
below to our GAAP operating results are included at the end of this
release. See also “About Non-GAAP Financial Measures.”
Revenue less repair payments* in the fiscal first quarter were
$113.8 million, representing a 10.9% increase versus the first
quarter of last year and a 0.9% increase from the previous quarter.
Year-over-year, revenue improvement was broad-based with the growth
rate paced by strength in the Utilities, Banking & Financial
Services, and Retail & CPG verticals. Revenue expanded despite
currency headwinds from the average GBP/$ exchange rate, which
depreciated 3.0% versus Q1 of last year and 1.2% sequentially.
Excluding exchange rate impacts, constant currency revenue* in the
first quarter grew 12.6% year-over-year and 1.6% sequentially.
Adjusted operating margin* for the quarter was 13.9%, as
compared to 13.2% in Q1 of last year, and 15.8% reported in the
fourth quarter. On a year-over-year basis, operating margin
improved as a result of depreciation in the Indian rupee against
the US dollar, and operating leverage associated with higher
revenue. Partially offsetting this favorability were investments in
global infrastructure which reduced seat utilization, and the
impact of our annual wage increases. The sequential reduction in
adjusted operating margin* from Q4 to Q1 is largely seasonal in
nature, driven by the timing of our annual wage increases.
Adjusted net income (ANI)* in the fiscal first quarter was $14.4
million, up $3.3 million as compared to Q1 of last year and down
$1.3 million from the previous quarter. The first quarter ANI*
margin was 12.7%, as compared to 10.8% in Q1 of last year, and
14.0% reported last quarter. In addition to the impacts of adjusted
operating margin* discussed above, ANI* margin both year-over-year
and sequentially benefited from increased interest income driven by
higher average cash balances and investment returns.
From a balance sheet perspective, WNS ended the fiscal first
quarter with $102.5 million in cash and investments and $94.2
million of gross debt. In the first quarter, the company generated
$8.1 million in cash from operations, and had $5.5 million in
capital expenditures. Days sales outstanding were 31 days,
representing a decrease from 33 days reported in both Q1 of last
year and the previous quarter.
“Our first quarter revenue performance represented 10.9%
year-over-year growth, and excluding the impact of the depreciating
British Pound, 12.6% growth on a constant currency* basis. We
believe that as the year progresses and revenues increase, the
company will be able to leverage the investments made over the past
few years to drive expanding margins and profits,” said Keshav
Murugesh, WNS’s Chief Executive Officer.
“We remain comfortable with the environment in which we are
currently operating. Demand for BPO services is robust, and WNS’s
differentiated capabilities are resonating well with both existing
and prospective clients. The entire WNS team will continue to focus
on creating increased business value for all of our key
stakeholders, including clients, employees and shareholders.”
Fiscal 2014 Guidance
WNS has updated guidance for the fiscal year ending March 31,
2014 as follows:
- Revenue less repair payments* is
expected to be between $462 million and $478 million, up from
$436.1 million in fiscal 2013. This assumes an average GBP to USD
exchange rate of 1.50 for the remainder of fiscal 2014.
- ANI* is expected to range between $66
million and $70 million, up from $53.1 million in fiscal 2013. This
assumes an average USD to INR exchange rate of 60.0 for the
remainder of fiscal 2014.
“Consistent with the company’s guidance philosophy, our updated
forecast for fiscal 2014 is based on current visibility levels and
exchange rates. Guidance for the year reflects top line growth of
6% to 10%, with 95% visibility to the midpoint of the range. This
guidance represents 8% to 12% revenue growth on a constant
currency* basis. Our ANI* guidance reflects 24% to 32%
year-over-year improvement. We are committed to funding our
strategic investment programs while driving metrics-based,
operational improvements across the organization. These programs
are critical to differentiating our services, growing revenue and
expanding profitability going forward,” said Deepak Sogani, WNS’s
Chief Financial Officer.
Conference Call
WNS will host a conference call on July 17, 2013 at 8:00 am
(Eastern) to discuss the company's quarterly results. To
participate in the call, please use the following details:
+1-800-706-7745; international dial-in +1-617-614-3472; participant
passcode 30761121. A replay will be available for one week
following the call at +1-888-286-8010; international dial-in
+1-617-801-6888; passcode 55896688, as well as on the WNS website,
www.wns.com, beginning two hours after the end of the call.
About WNS
WNS (Holdings) Limited (NYSE: WNS) is a leading global business
process outsourcing company. WNS offers business value to 200+
global clients by combining operational excellence with deep domain
expertise in key industry verticals including Travel, Insurance,
Banking and Financial Services, Manufacturing, Retail and Consumer
Packaged Goods, Shipping and Logistics and Healthcare and
Utilities. WNS delivers an entire spectrum of business process
outsourcing services such as finance and accounting, customer care,
technology solutions, research and analytics and industry specific
back office and front office processes. As of June 30, 2013, WNS
had 26,178 professionals across 32 delivery centers worldwide
including China, Costa Rica, India, Philippines, Poland, Romania,
South Africa, Sri Lanka, United Kingdom and the United States. For
more information, visit www.wns.com.
Safe Harbor Statement
This 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 are based on
our current expectations and assumptions about our Company and our
industry. Generally, these forward-looking statements may be
identified by the use of terminology such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “will,” “seek,” “should”
and similar expressions. These statements include, among other
things, the discussions of our strategic initiatives and the
expected resulting benefits, our growth opportunities, industry
environment, expectations concerning our future financial
performance and growth potential, including our fiscal 2014
guidance and future profitability, and expected foreign currency
exchange rates. Forward-looking statements inherently involve risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements. Such
risks and uncertainties include but are not limited to Fusion’s
volume of business; our ability to successfully integrate Fusion’s
business operations with ours; our ability to successfully leverage
Fusion’s assets to grow our revenue, expand our service offerings
and market share and achieve accretive benefits from our
acquisition of Fusion; worldwide economic and business conditions;
political or economic instability in the jurisdictions where we
have operations; regulatory, legislative and judicial developments;
our ability to attract and retain clients; 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 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; the effects
of our different pricing strategies or those of our competitors;
and increasing competition in the BPO industry. These and other
factors are more fully discussed in our most recent annual report
on Form 20-F and subsequent reports on Form 6-K filed with or
furnished to the US Securities and Exchange Commission (SEC) which
are available at www.sec.gov. We caution you not to place undue
reliance on any forward-looking statements. Except as required by
law, we do not undertake to update any forward-looking statements
to reflect future events or circumstances.
References to “$” and “USD” refer to the United States dollars,
the legal currency of the United States; references to “GBP” refer
to the British Pound, the legal currency of Britain; and references
to “INR” refer to Indian Rupees, the legal currency of India.
References to GAAP refer to International Financial Reporting
Standards, as issued by the International Accounting Standards
Board (IFRS).
* See “About Non-GAAP Financial Measures” and the
reconciliations of the historical non-GAAP financial measures to
our GAAP operating results at the end of this release.
About Non-GAAP Financial
Measures
The financial information in this release is focused on non-GAAP
financial measures as we believe that they reflect more accurately
our operating performance. Reconciliations of these non-GAAP
financial measures to our GAAP operating results are included
below. A discussion of our GAAP measures is contained in “Part I
–Item 5. Operating and Financial Review and Prospects” in our
annual report on Form 20-F filed with the SEC on May 2, 2013.
For financial statement reporting purposes, WNS has two
reportable segments: WNS Global BPO and WNS Auto Claims BPO.
Revenue less repair payments is a non-GAAP financial measure that
is calculated as (a) revenue less (b) in the auto claims business,
payments to repair centers (1) for “fault” repair cases where WNS
acts as the principal in its dealings with the third party repair
centers and its clients and (2) for “non-fault” repair cases with
respect to one client to whom WNS provides services similar to its
“fault” repair cases. WNS believes that revenue less repair
payments for “fault” repairs reflects more accurately the value
addition of the business process outsourcing services that it
directly provides to its clients. For more details, please see the
discussion in “Part I – Item 5. Operating and Financial Review and
Prospects – Overview” in our annual report on Form 20-F filed with
the SEC on May 2, 2013.
Constant currency revenue less repair payments is a non-GAAP
financial measure. We present constant currency revenue less repair
payments so that revenue less repair payments may be viewed without
the impact of foreign currency exchange rate fluctuations, thereby
facilitating period-to-period comparisons of business performance.
Constant currency revenue less repair payments is calculated, for
the indicated periods, by restating the prior period’s revenue less
repair payments denominated in pound sterling or Euro, as
applicable, using the foreign exchange rate used for the latest
period.
WNS also presents (1) adjusted operating margin, which refers to
adjusted operating profit (calculated as operating profit excluding
amortization of intangible assets and share-based compensation
expense) as a percentage of revenue less repair payments, and (2)
ANI, which is calculated as profit excluding amortization of
intangible assets and share-based compensation expense, and other
non-GAAP measures included in this release as supplemental measures
of its performance. WNS presents these non-GAAP measures because it
believes they assist investors in comparing its performance across
reporting periods on a consistent basis by excluding items that it
does not believe are indicative of its core operating performance.
In addition, it uses these non-GAAP measures (i) as a factor in
evaluating management’s performance when determining incentive
compensation and (ii) to evaluate the effectiveness of its business
strategies. These non-GAAP measures are not meant to be considered
in isolation or as a substitute for WNS’s financial results
prepared in accordance with IFRS.
WNS (HOLDINGS) LIMITED CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (Unaudited, amounts in millions, except share and
per share data) Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
Revenue $ 122.1 $ 107.8 $ 119.2 Cost of revenue 84.4
73.4 81.4 Gross profit 37.7 34.4 37.8
Operating expenses: Selling and marketing expenses 7.8 7.4 7.8
General and administrative expenses 15.0 12.6 14.2 Foreign exchange
loss / (gain), net 0.5 2.4 (1.1 ) Amortization of intangible assets
6.2 6.6 6.7 Operating
profit 8.2 5.2 10.2 Other income, net (2.2 ) (1.0 ) (1.6 ) Finance
expense 0.8 1.0 0.9
Profit before income taxes 9.6 5.2 10.9 Provision for income taxes
2.8 2.4 2.8 Profit $ 6.7
$ 2.8 $ 8.2 Earnings per share of
ordinary share Basic $ 0.13 $ 0.06 $ 0.16
Diluted $ 0.13 $ 0.06 $ 0.16
Growth of revenue (GAAP) and revenue
less repair payments (non-GAAP)
Three months ended
Three months endedJun 30, 2013
compared to
Jun 30,2013
Jun 30,2012
Mar 31,2013
Jun 30,2012
Mar 31,2013
(Amounts in millions) (% growth) Revenue (GAAP) $
122.1 $ 107.8 $ 119.2
13.3 % 2.5 % Less: Payments to repair centers 8.4 5.2 6.5 60.9 %
29.7 % Revenue less repair payments (Non-GAAP) $ 113.8 $ 102.6 $
112.8 10.9 % 0.9 % Constant currency revenue less
repair payments (Non-GAAP)
113.8 101.1 112.0 12.6 % 1.6 %
Reconciliation of cost of revenue (GAAP
to non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
(Amounts in millions) Cost of revenue (GAAP) $ 84.4 $ 73.4 $
81.4 Less: Payments to repair centers 8.4 5.2 6.5 Less: Share-based
compensation expense 0.3 0.4 0.3 Adjusted cost of revenue
(excluding payment to repair centers and share-based compensation
expense) (Non-GAAP) $ 75.7 $ 67.8 $ 74.7
Reconciliation of gross profit (GAAP to
non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
(Amounts in millions) Gross profit (GAAP) $ 37.7 $ 34.4
$
37.8
Add: Share-based compensation expense 0.3 0.4 0.3 Adjusted gross
profit (excluding share-based compensation expense) (Non-GAAP) $
38.0 $ 34.8
$
38.1
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
Gross profit as a percentage of revenue (GAAP) 30.9 % 31.9 % 31.7 %
Adjusted gross profit (excluding share-based compensation expense)
as a percentage of revenue less repair payments (Non-GAAP) 33.4 %
33.9 % 33.8 %
Reconciliation of selling and marketing
expenses (GAAP to non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
(Amounts in millions) Selling and marketing expenses (GAAP)
$ 7.8 $ 7.4 $ 7.8 Less: Share-based compensation expense 0.1 0.1
0.1 Adjusted selling and marketing expenses (excluding share-based
compensation expense) (Non-GAAP) $ 7.8 $ 7.3 $ 7.7
Three
months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
Selling and marketing expenses as a percentage of revenue (GAAP)
6.4% 6.9% 6.5% Adjusted selling and marketing expenses (excluding
share-based compensation expense) as a percentage of revenue less
repair payments (Non-GAAP) 6.8% 7.1% 6.8%
Reconciliation of general and
administrative expenses (GAAP to non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
(Amounts in millions) General and administrative expenses
(GAAP) $ 15.0 $ 12.6 $ 14.2 Less: Share-based compensation expense
1.1 1.1 0.6 Adjusted general and administrative expenses (excluding
share-based compensation expense) (Non-GAAP) $ 13.9 $ 11.5 $ 13.6
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
General and administrative expenses as a percentage of revenue
(GAAP) 12.3 % 11.7 % 11.9 % Adjusted general and administrative
expenses (excluding share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP) 12.2 % 11.2 %
12.1 %
Reconciliation of operating profit
(GAAP to non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
(Amounts in millions) Operating profit (GAAP) $ 8.2 $ 5.2 $
10.2 Add: Amortization of intangible assets 6.2 6.6 $ 6.7 Add:
Share-based compensation expense 1.5 1.7 0.9 Adjusted operating
profit (excluding amortization of intangible assets and share-based
compensation expense) (Non-GAAP) $ 15.9 $ 13.5 $ 17.9
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
Operating profit as a percentage of revenue (GAAP) 6.7 % 4.9 % 8.6
% Adjusted operating profit (excluding amortization of intangible
assets and share-based compensation expense) as a percentage of
revenue less repair payments (Non-GAAP) 13.9 % 13.2 % 15.8 %
Reconciliation of profit (GAAP to
non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
(Amounts in millions) Profit (GAAP) $ 6.7 $ 2.8 $ 8.2 Add:
Amortization of intangible assets 6.2 6.6 6.7 Add: Share-based
compensation expense 1.5 1.7 0.9 Adjusted net income (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 14.4 $ 11.1 $ 15.8
Three months
ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
Profit as a percentage of revenue (GAAP) 5.5 % 2.6 % 6.9 % Adjusted
net income (excluding amortization of intangible assets and
share-based compensation expense) as a percentage of revenue less
repair payments (Non-GAAP) 12.7 % 10.8 % 14.0 %
Reconciliation of basic income per ADS
(GAAP to non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
Basic earnings per ADS (GAAP) $ 0.13 $ 0.06 $ 0.16 Add: Adjustments
for amortization of intangible assets and share-based compensation
expense 0.15 0.16 0.15 Adjusted basic net income per ADS (excluding
amortization of intangible assets and share-based compensation
expense) (Non-GAAP) $ 0.29 $ 0.22 $ 0.31
Reconciliation of diluted income per
ADS (GAAP to non-GAAP)
Three months ended
Jun 30,2013
Jun 30,2012
Mar 31,2013
Diluted earnings per ADS (GAAP) $ 0.13 $ 0.06 $ 0.16 Add:
Adjustments for amortization of intangible assets and share-based
compensation expense. 0.15 0.16 0.15 Adjusted diluted net income
per ADS (excluding amortization of intangible assets and
share-based compensation expense) (Non-GAAP) $ 0.28 $ 0.22 $ 0.30
WNS (HOLDINGS) LIMITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in
millions, except share and per share data)
As atJune 30, 2013
As atMarch 31, 2013
ASSETS Current assets: Cash and cash equivalents $ 23.4 $
27.9 Investments 79.0 46.5 Trade receivables, net 57.6 64.4
Unbilled revenue 28.3 25.5 Funds held for clients 19.7 19.9
Derivative assets 4.2 7.6 Prepayments and other current assets
15.7 12.0 Total current assets
227.9 203.8 Non-current assets: Goodwill 83.1
87.1 Intangible assets 82.1 92.1 Property and equipment, net 46.2
48.4 Derivative assets 1.7 3.8 Investments 0.0 43.2 Deferred tax
assets 42.2 41.6 Other non-current assets 16.1
14.8 Total non-current assets 271.3
331.1
TOTAL ASSETS $ 499.2 $ 534.9
LIABILITIES AND EQUITY Current liabilities: Trade
payables $ 27.7 $ 29.3 Provisions and accrued expenses 27.6 26.7
Derivative liabilities 8.0 3.9 Pension and other employee
obligations 24.2 32.7 Short term line of credit 53.3 54.9 Current
portion of long term debt 7.8 7.7 Deferred revenue 5.6 6.5 Current
taxes payable 5.6 5.2 Other liabilities 9.0
15.4 Total current liabilities 168.8
182.4 Non-current liabilities: Derivative liabilities 5.1
1.3 Pension and other employee obligations 4.7 5.6 Long term debt
33.1 33.7 Deferred revenue 3.0 3.3 Other non-current liabilities
3.5 4.4 Deferred tax liabilities 3.5 3.6
Total non-current liabilities 53.0 51.9
TOTAL LIABILITIES $ 221.7 $ 234.3
Shareholders' equity: Share capital (ordinary shares $ 0.16
(10 pence) par value, authorized 60,000,000 shares; issued:
50,770,710 and 50,588,044 shares each as at June 30, 2013 and March
31, 2013, respectively) 8.0 7.9 Share premium 271.0 269.3 Retained
earnings 86.8 80.1 Other components of equity (88.3 )
(56.7 ) Total shareholders' equity 277.5 300.6
TOTAL LIABILITIES AND EQUITY $ 499.2 $ 534.9
WNS (Holdings) LimitedInvestors:David MackeyCorporate
SVP–Finance & Head of Investor Relations+1 201 942
6261ir@wns.comorMedia:Sumi
GuptaPublic Relations+91 (22) 4095 2263sumi.gupta@wns.com ;
pr@wns.com
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