WNS (Holdings) Limited (NYSE: WNS), a leading provider of offshore business process outsourcing (BPO) services, announced results for the quarter ended December 31, 2007 and raised its net income guidance for fiscal 2008.
Revenue for the third fiscal quarter was $115.6 million, an increase of 13.4% over the corresponding quarter in the prior fiscal year. Revenue less repair payments of $74.1 million increased 29.5% over the same period a year ago. Revenue less repair payments for the quarter did not include any revenue contribution from First Magnus Financial Corporation due to its bankruptcy filing in August 2007. However, revenue less repair payments for the corresponding quarter in the prior fiscal year included $3.8 million of revenue from this client.
Net income for the third fiscal quarter was $5.5 million, a decrease of 23.1% over the corresponding quarter in the prior fiscal year. Net income (excluding share-based compensation, related fringe benefit taxes and amortization of intangible assets) was $8.1 million, a decrease of 8.9% from the corresponding quarter last year. This decrease is primarily due to the appreciation of the Indian Rupee against the US Dollar.
WNS recorded a basic income per share of $0.13. Basic income per share (excluding share-based compensation, related fringe benefit taxes and amortization of intangible assets) was $0.19 for the quarter.
"With a solid third quarter behind us and the continued secular growth trend in offshore BPO, we remain focused on growth," said Neeraj Bhargava, Group Chief Executive Officer. "With low mortgage and banking sector exposure, after the loss of First Magnus as a client, and a steady flow of opportunities in other sectors we are optimistic about growth even in a challenging economic environment."
Financial Highlights: Fiscal Third Quarter Ended December 31, 2007
-- Quarterly revenue of $115.6 million, up 13.4% from the corresponding quarter last year.
-- Quarterly revenue less repair payments of $74.1 million, up 29.5% from the corresponding quarter last year.
-- Quarterly net income of $5.5 million, down 23.1% from the corresponding quarter last year.
-- Quarterly net income (excluding share-based compensation, related fringe benefit taxes and amortization of intangible assets) of $8.1 million, down 8.9% from the corresponding quarter last year.
-- Quarterly basic income per share of 13 cents, down from basic income per share of 18 cents for the corresponding quarter last year.
-- Quarterly basic income per share (excluding share-based compensation, related fringe benefit taxes and amortization of intangible assets) of 19 cents, down from 22 cents for the corresponding quarter last year.
-- Cash flows from operating activities of $20.7 million for the nine months ended December 31, 2007, down from $26.4 million for the nine months ended December 31, 2006
Reconciliations of non-GAAP financial measures to GAAP operating results are included at the end of this release.
Key Organizational Developments
WNS earlier announced it has strengthened its leadership team with the appointment of Alok Misra as its new CFO. He was previously the Chief Financial Officer of MphasiS Ltd., an EDS company.
"Alok has consistently demonstrated strong financial leadership for global services companies," said Mr. Bhargava. "As WNS expands its global footprint, Alok's significant experience and expertise will help drive the success of the company's overall business strategy. He is a valuable addition to the WNS management team."
WNS last month also announced the launch of its operation in Bucharest, Romania, for high-end finance and accounting and customer support services. The center will also be a hub for providing European language services.
WNS has also announced several awards during the past quarter that recognize the company's operational excellence and high-quality service delivery. These awards include:
-- Best Performing FAO Provider by Global Services and neo IT
-- Named as part of The Global Services 100 list for 2008 by Global Services and neo IT
-- WNS Assistance recognized as the Best Accident Management Company by the Auto Body Professionals Club, a UK automobile repair trade organization
-- The Best Achievement of Six Sigma in Outsourcing by Global Six Sigma experts and practitioners
-- The Golden Peacock Innovation Award by The Institute of Directors, India
-- The Supplier Innovation Award by KLM, a key travel client
-- Eric Selvadurai, Managing Director, WNS Europe, awarded the "Market Maker Award" by FAO Today magazine
Fiscal 2008 Guidance
WNS raises its November 14, 2007 guidance for fiscal 2008:
-- Revenue less repair payments is expected to be between $290 million and $295 million, in line with the company's previous guidance.
-- Net income (excluding share-based compensation and related fringe benefit taxes, amortization and impairment of goodwill and intangible assets) is expected to be between $34.0 million to $ 36.0 million. This represents a $1.0 million increase from the company's previous guidance of $33 million to $35 million.
"We are targeting better than expected profits for the year due to expansion of current client relationships, the accelerated growth of our analytics services businesses, and an ability to control costs, which have allowed us to weather pressure from currency appreciation and declines in mortgage revenue," said Mr. Bhargava.
Conference Call
WNS will host a conference call on February 8, at 8 a.m. (EST) to discuss the company's quarterly results. To participate, callers can dial 1-800-295-3991 from within the U.S. or +1-617-614-3924 from any other country. The participant passcode is 1352836. A replay will be made available online at www.wnsgs.com for a period of three months beginning two hours after the end of the call.
About WNS
WNS (NYSE: WNS) is a leading global Business Process Outsourcing company. Deep industry and business process knowledge, a partnership approach, comprehensive service offering and a proven track record enables WNS to deliver business value to some of the leading companies in the world. With over 17,000 employees, WNS is passionate about building a market leading company valued by our clients, employees, business partners, investors and communities. For more information, please visit our website at www.wnsgs.com.
About Non-GAAP Financial Measures
For financial statement reporting purposes, the company has two reportable segments: WNS Global BPO and WNS Auto Claims BPO. In the auto claims segment, WNS provides claims-handling and accident-management services, in which it arranges for automobile repairs through a network of third-party repair centers. In its accident-management services, WNS acts as the principal in dealings with the third-party repair centers and clients.
The amounts invoiced to WNS clients for payments made by WNS to third-party repair centers are reported as revenue. As the company wholly subcontracts the repairs to the repair centers, it evaluates its financial performance based on revenue less repair payments to third party repair centers, which is a non-GAAP measure.
WNS believes revenue less repair payments reflects more accurately the value addition of the business process services it directly provides to its clients. The presentation of this non-GAAP information is not meant to be considered in isolation or as a substitute for the company's financial results prepared in accordance with U.S. GAAP. WNS revenue less repair payments may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.
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