Business Wire IndiaWNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2017 fourth quarter and full year ended March 31, 2017.
| Highlights – Fiscal 2017 Fourth Quarter: |
GAAP Financials
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| Highlights – Fiscal 2017 Full Year: |
GAAP Financials
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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 in the fourth quarter was $159.4 million, representing an 11.7% increase versus Q4 of last year and a 9.6% increase from the previous quarter. Revenue less repair payments* in the fourth quarter was $154.1 million, an increase of 13.9% year-over-year and 10.2% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal fourth quarter grew 19.1% versus Q4 of last year and 9.9% sequentially. Year-over-year, fiscal Q4 revenue was impacted by currency movements net of hedging, primarily related to depreciation in the British pound against the US dollar. This headwind was more than offset by broad-based revenue growth across key verticals from both new and existing clients. Year-over-year revenue also increased as a result of the company’s acquisitions of Value Edge, Denali and HealthHelp. Sequentially, revenue growth was driven by acquisitions, improved farming activities, new client wins, and one-time revenue benefits from project extensions, gain sharing and client transition work.
WNS recorded an operating loss margin in the fourth quarter of (2.0%), as compared to operating profit margin of 13.2% in Q4 of last year and 14.2% in the previous quarter. In Q4, WNS recorded a non-recurring $21.7 million charge for goodwill impairment relating to the AutoClaims business. The company believes this impairment charge was necessary given developments in Q4 including the proposed regulatory changes in the legal services market which will result in WNS exiting this part of the business, and the loss of business due to contract reductions and cancellations in the traditional repair business. On a year-over-year basis, margin reductions were driven by goodwill impairment, acquisition-related expenses, the impact of our annual wage increases, and currency movements net of hedging. These headwinds were partially offset by a step-down in amortization of intangible asset expense and increased operating leverage from higher volumes. Sequentially, margins were pressured by goodwill impairment, acquisition-related expenses, hiring in advance of large deal ramps, and currency net of hedging which more than offset benefits from the step-down in amortization of intangible asset expense and increased operating leverage on higher volumes.
Fourth quarter adjusted operating margin* was 18.1%, versus 22.0% in Q4 of last year and 21.3% last quarter. On both a year-over-year and sequential basis, adjusted operating margin* reduced for the same reasons discussed for GAAP operating margin, with the exception of impacts relating to goodwill impairment and amortization of intangible asset expense. The goodwill impairment charge has been excluded from adjusted operating margin* and adjusted net income (ANI)* as it is non-recurring in nature.
In the fiscal fourth quarter, WNS recorded a loss of ($5.0) million, as compared to profits of $15.9 million in Q4 of last year and $18.0 million in the previous quarter. Adjusted net income (ANI)* in Q4 was $24.0 million, up $0.6 million as compared to Q4 of last year and down $1.2 million from the previous quarter.
From a balance sheet perspective, WNS ended Q4 with $182.2 million in cash and investments and $116.7 million of debt. In the fourth quarter, the company generated $30.7 million in cash from operations, had $7.4 million in capital expenditures and spent $117.8 million on acquisitions. Days sales outstanding were 29 days, as compared to 28 days in Q4 of last year and 30 days reported in the previous quarter.
“Our business continues to perform well, as evidenced by Q4 constant currency revenue growth of 19.1%, healthy adjusted operating margins and strong adjusted diluted earnings per share. We also acquired two new strategic businesses in the fourth quarter, with Denali enhancing our high-end procurement capabilities, and HealthHelp providing us with a technology-led, analytics-driven offering in care management,” said Keshav Murugesh, WNS’ Chief Executive Officer. “Overall, we are pleased with our fiscal 2017 performance, including constant currency revenue growth of 15.8%, adjusted operating margins of 19.4% and adjusted earnings per diluted share of $1.74. WNS also completed three tuck-in acquisitions and repurchased 2.2 million shares of stock during the year.”
“Entering fiscal 2018, we are excited about WNS’ strategic positioning and business momentum. Our clients’ businesses are becoming increasingly complex and competitive, necessitating changes to how they approach their respective markets. WNS is helping clients deal with business disruption by delivering the right combination of domain expertise, analytics, automation, digital capabilities and global process expertise. We will continue to target industry leading financial performance and generating increased value for all of our key stakeholders.”
Fiscal 2018 Guidance
WNS is providing guidance for the fiscal year ending March 31, 2018 as follows:
- Revenue less repair payments* is expected to be between $680 million and $713 million, up from $578.4 million in fiscal 2017. This assumes an average GBP to USD exchange rate of 1.25 in fiscal 2018 versus 1.31 in fiscal 2017.
- ANI* is expected to range between $97 million and $105 million versus $92.2 million in fiscal 2017. This assumes an average USD to INR exchange rate of 64.5 in fiscal 2018 versus 67.1 in fiscal 2017.
- Based on a diluted share count of 51.5 million shares, the company expects adjusted diluted earnings* per ADS to be in the range of $1.88 to $2.04 versus $1.74 in fiscal 2017.
Conference Call
WNS will host a conference call on April 27, 2017 at 8:00 am (Eastern) to discuss the company's quarterly results. To participate in the call, please use the following details: +1-888-656-9018; international dial-in +1-503-343-6030; participant passcode 3697333. A replay will be available for one week following the call at +1-855-859-2056; international dial-in +1-404-537-3406; passcode 3697333, 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 management company. WNS offers business value to 300+ 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, Healthcare and Utilities. WNS delivers an entire spectrum of business process management services such as finance and accounting, customer interaction services, technology solutions, research and analytics and industry specific back office and front office processes. As of March 31, 2017, WNS had 33,968 professionals across 48 delivery centers worldwide including China, Costa Rica, India, Philippines, Poland, Romania, South Africa, Sri Lanka, Turkey, 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 2018 guidance, future profitability, estimated capital expenditures, the expected benefits of our acquisitions of Denali and HealthHelp, 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 worldwide economic and business conditions; political or economic instability in the jurisdictions where we have operations; our dependence on a limited number of clients in a limited number of industries; regulatory, legislative and judicial developments; increasing competition in the BPM industry; technological innovation; telecommunications or technology disruptions; our liability arising from fraud or unauthorized disclosure of sensitive or confidential client and customer data; our ability to attract and retain clients; negative public reaction in the US or the UK to offshore outsourcing; our ability to expand our business or effectively manage growth; our ability to hire and retain enough sufficiently trained employees to support our operations; the effects of our different pricing strategies or those of our competitors; our ability to successfully consummate, integrate and achieve accretive benefits from our strategic acquisitions, and to successfully grow our revenue and expand our service offerings and market share; and future regulatory actions and conditions in our operating areas. 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 refers to International Financial Reporting Standards, as issued by the International Accounting Standards Board (IFRS).
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, amounts in millions, except share and per share data)
| Three months ended | Year ended | |||||||||||||||||||
| Mar 31,2017 | Mar 31,2016 | Dec 31, 2016 | Mar 31,2017 | Mar 31,2016 | ||||||||||||||||
| Revenue | $ | 159.4 | $ | 142.6 | $ | 145.4 | $ | 602.5 | $ | 562.2 | ||||||||||
| Cost of revenue | 107.4 | 92.2 | 97.5 | 403.3 | 365.4 | |||||||||||||||
| Gross profit | 52.0 | 50.4 | 47.9 | 199.2 | 196.8 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling and marketing expenses | 9.0 | 7.4 | 7.9 | 32.6 | 30.8 | |||||||||||||||
| General and administrative expenses | 27.3 | 20.8 | 21.5 | 91.7 | 78.9 | |||||||||||||||
| Foreign exchange loss/ (gain), net | (5.7) | (2.8) | (6.2) | (14.5) | (11.0) | |||||||||||||||
| Impairment of goodwill | 21.7 | - | - | 21.7 | - | |||||||||||||||
| Amortization of intangible assets | 2.9 | 6.2 | 4.1 | 20.5 | 25.2 | |||||||||||||||
| Operating profit / (loss) | (3.3) | 18.8 | 20.6 | 47.2 | 72.8 | |||||||||||||||
| Other income, net | (2.0) | (2.6) | (2.2) | (8.7) | (8.5) | |||||||||||||||
| Finance expense | 0.4 | 0.0 | 0.0 | 0.5 | 0.3 | |||||||||||||||
| Profit / (loss) before income taxes | (1.6 | 21.4 | 22.8 | 55.3 | 81.1 | |||||||||||||||
| Provision for income taxes | 3.3 | 5.5 | 4.8 | 17.5 | 21.2 | |||||||||||||||
| Profit / (loss) | $ | (5.0) | $ | 15.9 | $ | 18.0 | $ | 37.8 | $ | 59.9 | ||||||||||
| Earnings per share of ordinary share | ||||||||||||||||||||
| Basic | $ | (0.10) | $ | 0.31 | $ | 0.36 | $ | 0.75 | $ | 1.17 | ||||||||||
| Diluted | $ | (0.10) | $ | 0.30 | $ | 0.35 | $ | 0.71 | $ | 1.12 |
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, amounts in millions, except share and per share data)
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