Ebix Earnings 2019-09-30

EBIX 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
SGMS	1,697	7,932	10,050	3,389	2,118	108	807	10,240	63%	12.7	1%
UPWK	1,669	449	191	275	191	-19	-14	1,649	69%	-115.9	-4%
BITA	1,652	59,744	39,436	0	0	0	0	-3,089			0%
CSGS	1,606	1,180	805	951	451	76	148	1,833	47%	12.4	6%
RENN	1,545	437	256	0	0	0	0	1,523			0%
EBIX	1,486	1,623	1,035	552	370	92	153	1,352	67%	8.9	6%
SSTK	1,412	593	289	639	366	33	86	1,150	57%	13.4	6%
LXFT	1,404	604	134	0	0	0	0	1,300			0%
VRTU	1,333	1,183	658	1,267	364	29	97	1,505	29%	15.5	2%
CARS	1,332	2,527	958	636	536	10	126	1,999	84%	15.9	0%

Document

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☑		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-15946

Ebix, Inc.

(Exact name of registrant as specified in its charter)




Delaware		77-0021975
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)

1 Ebix Way
Johns Creek	Georgia	30097
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 678-281-2020



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbols	Name of each exchange on which registered
Common stock, $0.10 par value per share	EBIX	Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Table of Contents



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 8, 2019 the number of shares of common stock outstanding was 30,495,578.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2019

INDEX



PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018 (unaudited)	2

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018 (unaudited)	3

Condensed Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	4

Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018 (unaudited)	6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)	10

Notes to Condensed Consolidated Financial Statements (unaudited)	12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3. Quantitative and Qualitative Disclosures About Market Risk	51

Item 4. Controls and Procedures	52

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	52

Item 1A. Risk Factors	52

Item 2. Repurchases of Equity Securities	53

Item 3. Defaults upon Senior Securities	53

Item 4. Mine Safety Disclosures	53

Item 5. Other Information	53

Item 6. Exhibits	53

EXHIBITS INDEX	54

SIGNATURES	55


Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ebix, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Operating revenue	$	147,233		$	128,643		$	434,432		$	361,499

Operating expenses:
Cost of services provided	55,171			42,963			152,054			126,113
Product development	11,245			11,010			33,884			28,115
Sales and marketing	4,284			4,721			14,898			13,542
General and administrative, net (see Note 1)	46,900			28,188			101,210			74,416
Amortization and depreciation	3,626			2,523			10,966			7,864
Total operating expenses	121,226			89,405			313,012			250,050

Operating income	26,007			39,238			121,420			111,449
Interest income	99			103			578			309
Interest expense	(10,970		)	(7,467		)	(32,551		)	(18,064		)
Non-operating income	352			7			344			60
Non-operating expense - litigation settlement	—			—			(21,140		)	—
Foreign currency exchange loss	(641		)	(921		)	(495		)	(2,919		)
Income before income taxes	14,847			30,960			68,156			90,835
Income tax benefit (expense)	217			(1,679		)	297			(6,027		)
Net income including noncontrolling interest	15,064			29,281			68,453			84,808
Net (loss) income attributable to noncontrolling interest	(5,445		)	39			(6,617		)	178
Net income attributable to Ebix, Inc.	$	20,509		$	29,242		$	75,070		$	84,630

Basic earnings per common share attributable to Ebix, Inc.	$	0.67		$	0.93		$	2.46		$	2.69

Diluted earnings per common share attributable to Ebix, Inc.	$	0.67		$	0.92		$	2.45		$	2.67

Basic weighted average shares outstanding	30,501			31,492			30,517			31,480

Diluted weighted average shares outstanding	30,633			31,628			30,598			31,638

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Ebix, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018

Net income including noncontrolling interest	$	15,064		$	29,281		$	68,453		$	84,808
Other comprehensive loss:
Foreign currency translation adjustments	(18,752		)	(30,873		)	(10,859		)	(61,810		)
Total other comprehensive loss	(18,752		)	(30,873		)	(10,859		)	(61,810		)
Comprehensive income	(3,688		)	(1,592		)	57,594			22,998
Comprehensive (loss) income attributable to noncontrolling interest	(5,445		)	39			(6,617		)	178
Comprehensive income attributable to Ebix, Inc.	$	1,757		$	(1,631	)	$	64,211		$	22,820

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Ebix, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)



	September 30, 2019		December 31, 2018
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	124,242	$	147,766
Short-term investments	4,795		31,192
Restricted cash	18,240		8,317
Fiduciary funds- restricted	4,200		6,491
Trade accounts receivable, less allowances of $21,011 and $6,969, respectively	165,397		174,340
Other current assets	63,615		59,274
Total current assets	380,489		427,380

Property and equipment, net	52,597		50,294
Right-of-use assets	17,008		—
Goodwill	958,813		946,685
Intangibles, net	46,298		51,448
Indefinite-lived intangibles	42,055		42,055
Capitalized software development costs, net	13,748		11,742
Deferred tax asset, net	59,906		54,629
Other assets	34,425		26,714
Total assets	$	1,605,339	$	1,610,947

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	117,520	$	130,221
Accrued payroll and related benefits	8,683		9,227
Working capital facility	35,829		17,841
Fiduciary funds- restricted	4,200		6,491
Short-term debt	1,253		3,990
Current portion of long term debt and financing lease obligation, net of deferred financing costs of $575, respectively	20,203		14,603
Lease liability	5,578		—
Contingent liability for accrued earn-out acquisition consideration	1,254		13,767
Contract liabilities	27,665		35,609
Other current liabilities	31,647		85,679
Total current liabilities	253,832		317,428

Revolving line of credit	438,037		424,537
Long term debt and financing lease obligations, less current portion, net of deferred financing costs of $1,703 and $1,811, respectively	259,992		274,716
Other liabilities	41,126		28,287
Contingent liability for accrued earn-out acquisition consideration	9,290		11,209
Contract liabilities	7,662		9,051
Deferred tax liability, net	1,282		1,282
Lease liability	10,802		—
Total liabilities	1,022,023		1,066,510

Commitments and Contingencies (see Note 5)

Table of Contents



Stockholders’ equity:
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at September 30, 2019 and December 31, 2018	—			—
Series Y Convertible preferred stock, $0.10 par value, 350,000 shares authorized, no shares issued and outstanding at September 30, 2019 and no shares authorized, issue and outstanding at December 31, 2018	—			—
Common stock, $0.10 par value, 220,000,000 shares authorized, 30,491,207 issued and outstanding, at September 30, 2019, and 30,567,725 issued and outstanding at December 31, 2018	3,049			3,057
Additional paid-in capital	6,208			3,397
Retained earnings	599,148			535,118
Accumulated other comprehensive loss	(74,236		)	(63,377		)
Total Ebix, Inc. stockholders’ equity	534,169			478,195
Noncontrolling interest (see Note 8)	49,147			66,242
Total stockholders’ equity	583,316			544,437
Total liabilities and stockholders’ equity	$	1,605,339		$	1,610,947

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Ebix, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(In thousands except for share figures)



	Common Stock
	Issued Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling interest			Total

Balance, July 1, 2019	30,529,840		$	3,053		$	5,189		$	582,913		$	(55,484	)	$	51,882		$	587,553
Net income attributable to Ebix, Inc.	—		—			—			20,509			—			—			20,509
Net loss attributable to noncontrolling interest	—		—			—			—			—			(5,445		)	(5,445		)
Cumulative translation adjustment	—		—			—			—			(18,752		)	—			(18,752		)
Repurchase and retirement of common stock	(45,000	)	(5		)	—			(1,975		)	—			—			(1,980		)
Vesting of restricted stock	6,558		1			(1		)	—			—			—			—
Share based compensation	—		—			1,029			—			—			—			1,029
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested	(191	)	—			(9		)	—			—			—			(9		)
Noncontrolling interest	—		—			—			—			—			2,710			2,710
Common stock dividends paid, $0.075 per share	—		—			—			(2,299		)	—			—			(2,299		)
Balance, September 30, 2019	30,491,207		$	3,049		$	6,208		$	599,148		$	(74,236	)	$	49,147		$	583,316

Table of Contents



	Common Stock
	Issued Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling interest			Total

Balance, January 1, 2019	30,567,725		$	3,057		$	3,397		$	535,118		$	(63,377	)	$	66,242		$	544,437
Net income attributable to Ebix, Inc.	—		—			—			75,070			—			—			75,070
Net loss attributable to noncontrolling interest	—		—			—			—			—			(6,617		)	(6,617		)
Cumulative translation adjustment	—		—			—			—			(10,859		)	—			(10,859		)
Repurchase and retirement of common stock	(95,000	)	(10		)	—			(4,142		)	—			—			(4,152		)
Vesting of restricted stock	19,144		2			(2		)	—			—			—			—
Share based compensation	—		—			2,451			—			—			—			2,451
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested	(662	)	—			(36		)	—			—			—			(36		)
Noncontrolling interest	—		—			398			—			—			(10,478		)	(10,080		)
Common stock dividends paid, $0.225 per share	—		—			—			(6,898		)	—			—			(6,898		)
Balance, September 30, 2019	30,491,207		$	3,049		$	6,208		$	599,148		$	(74,236	)	$	49,147		$	583,316

Table of Contents



	Common Stock
	Issued Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling interest			Total

Balance, July 1, 2018	31,473,654		$	3,146	$	734		$	550,480		$	(54,960	)	$	48,502		$	547,902
Net income attributable to Ebix, Inc.	—		—		—			29,242			—			—			29,242
Net income attributable to noncontrolling interest	—		—		—			—			—			39			39
Cumulative translation adjustment	—		—		—			—			(30,873		)	—			(30,873		)
Vesting of restricted stock	27,999		4		(4		)	—			—			—			—
Share based compensation	—		—		731			—			—			—			731
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested	(624	)	—		(47		)	—			—			—			(47		)
Noncontrolling interest	—		—		—			—			—			(3,035		)	(3,035		)
Common stock dividends paid, $0.075 per share	—		—		—			(2,369		)	—			—			(2,369		)
Balance, September 30, 2018	31,501,029		$	3,150	$	1,414		$	577,353		$	(85,833	)	$	45,506		$	541,590

Table of Contents



	Common Stock
	Issued Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling interest		Total

Balance, January 1, 2018	31,476,428		$	3,148		$	1,410		$	510,975		$	(24,023	)	$	42,249	$	533,759
Cumulative effect of accounting change (adoption of Topic 606), net of tax effect	—		—			—			(8,802		)	—			—		$	(8,802	)
Cumulative effect of accounting change (adoption of ASC 340-40), net of tax effect	—		—			—			(1,460		)	—			—		(1,460		)
Net income attributable to Ebix, Inc.	—		—			—			84,630			—			—		84,630
Net income attributable to noncontrolling interest	—		—			—			—			—			178		178
Cumulative translation adjustment	—		—			—			—			(61,810		)	—		(61,810		)
Repurchase and retirement of common stock	(30,000	)	(3		)	(1,339		)	(884		)	—			—		(2,226		)
Vesting of restricted stock	53,956		5			(5		)	—			—			—		—
Exercise of stock options	2,283		—			42			—			—			—		42
Share based compensation	—		—			2,240			—			—			—		2,240
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested	(1,638	)	—			(147		)	—			—			—		(147		)
Noncontrolling interest	—		—			(787		)	—			—			3,079		2,292
Common stock dividends paid, $0.225 per share	—		—			—			(7,106		)	—			—		(7,106		)
Balance, September 30, 2018	31,501,029		$	3,150		$	1,414		$	577,353		$	(85,833	)	$	45,506	$	541,590

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Ebix, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	Nine Months Ended
	September 30,
	2019			2018
Cash flows from operating activities:
Net income attributable to Ebix, Inc.	$	75,070		$	84,630
Net (loss) income attributable to noncontrolling interest	(6,617		)	178
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation	10,966			7,864
Benefit for deferred taxes	(5,880		)	(3,077		)
Share based compensation	2,451			2,240
Provision for doubtful accounts	10,580			2,622
Amortization of right-of-use assets	5,167			—
Unrealized foreign exchange loss	321			1,337
Amortization of capitalized software development costs	1,931			1,608
Reduction of acquisition accruals	(17,124		)	(645		)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	(6,403		)	(12,518		)
Other assets	(5,947		)	(655		)
Accounts payable and accrued expenses	(4,529		)	6,811
Accrued payroll and related benefits	(607		)	322
Contract liabilities	(9,126		)	(10,772		)
Lease liabilities	(5,056		)	(458		)
Reserve for potential uncertain income tax return positions	—			88
Other liabilities	33,844			(5,410		)
Net cash provided by operating activities	79,041			74,165

Cash flows from investing activities:
Acquisition of Transcorp	—			(6,554		)
Cash (paid to) received from Paul Merchants for 10% stake in MTSS combined business	(4,925		)	4,996
Acquisition of Weizmann, net of $11.3 million cash acquired	(77,350		)	—
Acquisition of Pearl	(3,372		)	—
Acquisition of Lawson	(2,726		)	—
Acquisition of Miles	(982		)	—
Acquisition of Business Travels	(689		)	—
Cash paid for acquisition of AHA taxis, net of $25 thousand cash acquired	(214		)	—
Cash paid for acquisition of Zillious, net of $279 thousand cash acquired	(9,816		)	—
Cash paid for acquisition of Essel Forex	(7,935		)	—
Cash paid for acquisition of Wallstreet Canada, net of $1.17 million cash acquired	(942		)	—
Cash paid for acquisition of Centrum, net of $13.4 million cash acquired	—			(176,137		)
Cash paid for acquisition of Smartclass, net of $982 thousand cash acquired	—			(7,593		)
Cash paid for acquisition of Indus, net of $1.3 million of cash acquired	—			(24,261		)
Cash paid for acquisition of Mercury, net of $1.1 million of cash acquired	—			(11,356		)
Cash paid for acquisition of Miles, net of $606 thousand cash acquired	—			601
Cash paid for acquisition of Leisure, net of $269 thousand cash acquired	—			(1,304		)
Additional Investment in ItzCash	—			(3,831		)

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	31	$1,486

10-Q	2019-11-12	Quarter: 2019-09-30
10-Q	2019-08-09	Quarter: 2019-06-30
10-Q	2019-05-10	Quarter: 2019-03-31
10-K	2019-03-01	Annual: 2018-12-31
10-Q	2018-11-09	Quarter: 2018-09-30
10-Q	2018-08-09	Quarter: 2018-06-30
10-Q	2018-05-10	Quarter: 2018-03-31
10-K	2018-03-01	Annual: 2017-12-31
10-Q	2017-11-09	Quarter: 2017-09-30
10-Q	2017-08-09	Quarter: 2017-06-30
10-Q	2017-05-10	Quarter: 2017-03-31
10-K	2017-03-01	Annual: 2016-12-31
10-Q	2016-11-09	Quarter: 2016-09-30
10-Q	2016-08-10	Quarter: 2016-06-30
10-Q	2016-05-10	Quarter: 2016-03-31
10-K	2016-02-29	Annual: 2015-12-31
10-Q	2015-11-09	Quarter: 2015-09-30
10-Q	2015-08-10	Quarter: 2015-06-30
10-Q	2015-05-11	Quarter: 2015-03-31
10-K	2015-03-16	Annual: 2014-12-31
10-Q	2014-11-10	Quarter: 2014-09-30
10-Q	2014-08-11	Quarter: 2014-06-30
10-Q	2014-05-12	Quarter: 2014-03-31
10-K	2014-03-17	Annual: 2013-12-31
10-Q	2013-11-08	Quarter: 2013-09-30
10-Q	2013-08-09	Quarter: 2013-06-30
10-Q	2013-05-10	Quarter: 2013-03-31
10-K	2013-03-18	Annual: 2012-12-31
10-Q	2012-11-09	Quarter: 2012-09-30
10-Q	2012-08-09	Quarter: 2012-06-30
10-Q	2012-05-10	Quarter: 2012-03-31
10-K	2012-03-15	Annual: 2011-12-31
10-Q	2011-11-09	Quarter: 2011-09-30
10-Q	2011-08-09	Quarter: 2011-06-30
10-Q	2011-05-10	Quarter: 2011-03-31
10-K	2011-03-16	Annual: 2010-12-31
10-Q	2010-11-09	Quarter: 2010-09-30
10-Q	2010-08-09	Quarter: 2010-06-30
10-Q	2010-05-10	Quarter: 2010-03-31
10-K	2010-03-16	Annual: 2009-12-31

8-K	2020-01-02	Officers
8-K	2019-11-12	Earnings, Exhibits
8-K	2019-09-26	Officers
8-K	2019-09-23	Other Events, Exhibits
8-K	2019-08-15	Shareholder Vote
8-K	2019-08-08	Earnings, Other Events, Exhibits
8-K	2019-07-22	Amend Bylaw, Other Events, Exhibits
8-K	2019-07-16	Enter Agreement, Other Events, Exhibits
8-K	2019-05-09	Earnings, Exhibits
8-K	2019-05-07	Officers, Exhibits
8-K	2019-04-10	Other Events
8-K	2019-04-10	Officers
8-K	2019-03-11	Other Events, Exhibits
8-K	2019-03-01	Earnings, Exhibits
8-K	2019-02-11	Other Events, Exhibits
8-K	2019-01-07
8-K	2019-01-07	Officers
8-K	2019-01-02	Other Events, Exhibits
8-K	2018-12-28	Accountant, Exhibits
8-K	2018-12-21	Regulation FD, Exhibits
8-K	2018-12-12	Officers, Regulation FD, Exhibits
8-K	2018-11-28	Regulation FD, Exhibits
8-K	2018-11-16	Shareholder Vote
8-K	2018-11-08	Earnings, Exhibits
8-K	2018-10-05	Accountant, Exhibits
8-K	2018-10-05	Accountant, Exhibits
8-K	2018-09-20	Other Events, Exhibits
8-K	2018-08-14	Shareholder Vote
8-K	2018-08-08	Earnings, Exhibits
8-K	2018-06-11
8-K	2018-06-05	Enter Agreement, Exhibits
8-K	2018-04-10	Officers, Exhibits
8-K	2018-04-02	Enter Agreement, Exhibits
8-K	2018-03-01	Earnings, Exhibits
8-K	2018-02-21	Enter Agreement, Exhibits

EX-10.1	active1218179641executed.htm
EX-31.1	ebix-ex311201910qxq3.htm
EX-31.2	ebix-ex312201910qxq3.htm
EX-32.1	ebix-ex321201910qxq3.htm
EX-32.2	ebix-ex322201910qxq3.htm