Diluted EPS of $0.41 in Q3 2011
ATLANTA, GA – November 8, 2011 – Ebix, Inc. (NASDAQ:EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today reported record financial results for the third quarter of 2011 and will host a conference call at 11:00 a.m. EST (details below)
Ebix delivered the following results for its third quarter, fiscal year 2011:
Operating Income: Q3 2011 operating income was $18.0 million, an increase of 37% on a year-over-year basis, as compared to Q3 2010 operating income of $13.1 million. The Company’s Operating income excluding any non-recurring gains was $16.8 million for the quarter.
Revenues: Total Q3 2011 revenue was $42.6 million, an increase of 28% on a year-over-year basis, as compared to Q3 2010 revenue of $33.3 million. During the nine months ended September 30, 2011 revenue increased $27.8 million or 29%, to $124.9 million compared to $97.1 million during the same period in 2010.
Expenses: The Company’s operating expenses for the quarter grew by 22.0% to $24.6 million as compared to $20.2 million for the third quarter of 2010.
Cash Flows: Net cash provided by the Company’s ongoing operations in Q3 2011 was $22.1 million, an increase of 120% year-over-year, compared to $10.0 million in Q3 of 2010. During the nine months ended September 30, 2011 the Company generated $51.9 million of net cash flow from operating activities, as compared to $33.8 million in the first nine months of 2010, an increase of 53%.
Margins: The Company reported an operating margin of 42% for Q3 2011 as compared to 39% for the same period during 2010. Excluding one-time gains, the operating margin in Q3 2011 was 39.4% as compared to Q3 2010 operating margin of 39.3%.
Net Income: Q3 2011 net income was $16.5 million, a decrease of less than 1% on a year-over-year basis, as compared to Q3 2010 net income of $16.7 million. Q3 2010 net income excluding the one time gain of $3.9 million associated with the E-Z Data puts was $12.8 million.
Earnings per Share: Q3 2011 diluted earnings per share declined 5% year-over-year to $0.41, as compared to $0.43 in the third quarter of 2010. However, Q3 2010 diluted EPS included a one time EPS gain of 10 cents resulting from the non-operating income of $3.9 million recognized in regards to the decrease in the fair value of the put option that was issued to the two former stockholders of E-Z Data who received shares of Ebix common stock as part of the acquisition consideration paid by the Company. For purposes of the Q3 2011 EPS calculation, there was an average of 40.4 million diluted shares outstanding during the quarter, as compared to 39.0 million diluted shares outstanding in Q3 of 2010.
Channel Revenues: The Exchange channel grew 40.5% year over year to $33.1 million or 77.5% of the Q3 revenues. The BPO channel decreased 13% year over year, to $3.58 million or 8% of the Q3 revenues. The Broker Channel grew 37% year over year, to $4.73 million or 11 % of the Q3 revenues. The Carrier channel decreased 43% year over year, to $1.27 million or 3% of the Q3 revenues.
Share Repurchases: During Q3 2011, the Company repurchased 2.01 million shares of our common stock at an average price of $17.28 per share for an aggregate amount of $34.80 million. Subsequent to September 30, 2011, the Company has purchased another 188,000 shares of its common stock at an average price of $14.14 for an aggregate amount of $2.66 million. Through November 7, the Company has repurchased 3.51 million shares of Ebix common stock in 2011, for an aggregate consideration in the amount of $63.66 million, representing an average price of $18.13 per share.
Q4 Diluted Share Count: Taking into account the share repurchases made by the Company to date, the Company expects the diluted share count for Q4 to be 39.42 million which would be 3% lower than the Q3 diluted share count used for EPS calculation. This diluted share count is likely to be even lower if the Company continues to repurchase its common stock from the market.
“We are very pleased with our record operating cash flow for the quarter, as they show that the company can grow its top line in a difficult industry environment, without sacrificing margins or compromising on price for our valued added Exchange products.” Ebix Chairman, President & CEO Robin Raina said, “Our results for the quarter validate our efforts to add additional sales force leadership and more sales people as we work to create a global institutional account management structure. We feel our greatest opportunity is to maximize the value of our existing relationships and we are making that investment with the rewards to be seen in 2012.”
Robin added, “We remain dedicated to generating shareholder value. In 3Q 2011 we used our free cash flow to repurchase our shares and announced our first dividend which is to be paid on November 30. Our long term strategy has not changed as we focus our team’s efforts daily towards growing the business organically, reviewing strategic accretive acquisitions, and utilizing our substantial operating cash flows to buyback our common stock. We believe that we can do all three resulting in an even higher return on invested capital for our shareholders.”
Ebix SVP and CFO Robert Kerris said, “The reported $22.1 million of operating cash flows generated during our 3rd quarter is a 13% improvement over Q2, and a 115% improvement over Q1. Furthermore, the $51.9 million of operating cash flow for the nine months ended September 30, 2011 essentially reflects a full recovery of the net income produced by the Company during the same period and demonstrates Ebix’s ability to quickly convert operating results into positive cash flows. The Company continues to grow efficiently, consistently producing favorable operating margins in the 40% range through the 3rd quarter of 2011 while revenues increased 29% over the same interim nine month period a year earlier.”
Investor Conference Call
With 30+ offices across Brazil, Singapore, Australia, the US, New Zealand, India and Canada, Ebix powers multiple exchanges across the world in the field of life, annuity, health and property & casualty insurance while conducting in excess of $100 billion in insurance premiums on its platforms. Through its various SaaS-based software platforms, Ebix employs hundreds of insurance and technology professionals to provide products, support and consultancy to thousands of customers on six continents. Ebix’s focus on quality has enabled it to be awarded Level 5 status of the Carnegie Mellon Software Engineering Institute’s Capability Maturity Model (CMM). With a recent ISO 27001-security certification, the Company also has a ISO 9001:2000 certification for both its development and BPO units in India. For more information, visit the Company’s website at www.ebix.com
Safe Harbor for Forward Looking Statements under the Private Securities Litigation Reform Act of 1995 — This press release contains various forward looking statements and information that are based on management's beliefs, as well as assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of the Company's products by the market and management's plans and objectives. The Company has tried to identify such forward looking statements by use of words such as "expects," "intends," "anticipates," "plans," "believes," "will," "should," and similar expressions, but these words are not the exclusive means of identifying such statements. Such statements are subject to various risks, uncertainties and other factors which could cause actual results to vary materially from those expressed in, or implied by, the forward looking statements. Such risks, uncertainties and other factors include the extent to which the Company's new products and services can be successfully developed and marketed, the integration and other risks associated with recent and future acquisitions, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties, the Company's ability to continue to develop new products to effectively address market needs in an industry characterized by rapid technological change, the Company's dependence on the insurance industry (and in particular independent agents), the highly competitive and rapidly changing automation systems market, the Company's ability to effectively protect its applications software and other proprietary information, the Company's ability to attract and retain quality management, and software, technical sales and other personnel, the potential negative impact on the Company's outsourcing business in India from adverse publicity and possible governmental regulation, the risks of disruption of the Company's Internet connections or internal service problems, the possibly adverse effects of a substantial increase in volume of traffic on the Company's website, mainframe and other servers, possible security breaches on the Company's website and the possible effects of insurance regulation on the Company's business. Certain of these, as well as other, risks, uncertainties and other factors, are described in more detail in Ebix’s periodic filings with the Securities and Exchange Commission, including the company’s annual report on form 10-K for the year ended December 31, 2010, included under "Item 1A. Business—Risk Factors." Except as expressly required by the federal securities laws, the Company undertakes no obligation to update any such factors or to publicly update any of the forward looking statements contained herein to reflect future events or developments or changed circumstances or for any other reason.
(Financial tables follow)