WNS Announces Fiscal 2018 Fourth Quarter and Full Year Earnings

Business Wire IndiaWNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2018 fourth quarter and full year ended March 31, 2018.  

  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 $202.7 million, representing a 27.2% increase versus Q4 of last year and a 7.5% increase from the previous quarter.  Revenue less repair payments* in the fourth quarter was $198.2 million, an increase of 28.6% year-over-year and 7.1% sequentially.  Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal fourth quarter grew 21.9% versus Q4 of last year and 4.6% sequentially.  Year-over-year, fiscal Q4 revenue improvement was driven by healthy organic growth across key verticals, services, and geographies, our acquisitions of HealthHelp and Denali which closed in March 2017 and January 2017 respectively, and favorability from currency net of hedging.  Sequentially, revenue growth was the result of project ramps with both new and existing clients and currency movements net of hedging.   Operating margin in the fourth quarter was 14.5%, as compared to an operating margin loss of (2.0%) in Q4 of last year and 13.6% in the previous quarter.  On a year-over-year basis, margin improvement was the result of a non-recurring $21.7 million charge for goodwill impairment relating to the AutoClaims business in Q4 of fiscal 2017, increased productivity, operating leverage on higher volumes, acquisition-related expenses incurred in Q4 of last year, and lower share-based compensation as a percentage of revenue.  These benefits more than offset the impact of our annual wage increases and currency movements net of hedging.  Sequentially, margins increased as a result of improved productivity, operating leverage on higher volumes, and lower share-based compensation.  These benefits more than offset currency movements net of hedging and lower seat utilization.   Fourth quarter adjusted operating margin* was 20.4%, versus 18.1% in Q4 of last year and 19.9% last quarter.  On a year-over-year basis, adjusted operating margin* improved due to increased productivity, operating leverage on higher volumes, and acquisition-related expenses incurred in Q4 of last year.  These benefits were partially offset by the impact of our annual wage increases and currency movements net of hedging.  Sequentially, adjusted operating margin* increased as a result of improved productivity and operating leverage on higher volumes.  These benefits more than offset currency movements net of hedging and lower seat utilization.   Profit in the fiscal fourth quarter was $24.5 million, as compared to ($5.0) million in Q4 of last year and $26.3 million in the previous quarter.  Adjusted net income (ANI)* in Q4 was $33.0 million, up $9.0 million as compared to Q4 of last year and down $1.2 million from the previous quarter.  In addition to the explanations discussed above, fiscal fourth quarter profit and adjusted net income* reduced on a sequential basis by $5.2 million as a result of the net impact of one-time provisional tax adjustments associated with the 2017 US Tax Reform bill recorded in the fiscal third quarter.   From a balance sheet perspective, WNS ended Q4 with $221.3 million in cash and investments and $89.1 million of debt. In the fourth quarter, the company generated $39.8 million in cash from operations, and had $5.9 million in capital expenditures.  Days sales outstanding were 30 days, as compared to 29 days reported in Q4 of last year and 30 days in the previous quarter.    “In the fiscal fourth quarter, WNS continued to demonstrate the strong value we are able to deliver to our clients, growing revenue less repair payments* 29% year-over-year.  For the full year, WNS generated $741.0 million in revenue less repair payments*, which represented 28% growth on a reported basis and 26% constant currency*.  Excluding the impact of acquisitions, fiscal 2018 top line improved 14% on a constant currency* basis.  In addition, WNS delivered 19% adjusted operating margin* for the year, and grew our adjusted diluted earnings per share* by 28% to $2.24,” said Keshav Murugesh, WNS’s Chief Executive Officer.  “WNS enters fiscal 2019 with solid business momentum.  The BPM industry remains stable and healthy, driven by disruption in our clients’ business environments.  We will continue to invest in our differentiated capabilities including domain expertise, technology and automation, analytics, and transformational solutions.  Our focus on helping clients improve their competitive positioning and delivering long-term sustainable value for all of our key stakeholders remains unchanged.”    

• Revenue less repair payments* is expected to be between $801 million and $847 million, up from $741.0 million in fiscal 2018. This assumes an average GBP to USD exchange rate of 1.40 in fiscal 2019 versus 1.33 in fiscal 2018.
• ANI* is expected to range between $115 million and $127 million versus $118.4 million in fiscal 2018.  This assumes an average USD to INR exchange rate of 65.0 in fiscal 2019 versus 64.5 in fiscal 2018.
• Based on a diluted share count of 52.8 million shares, the company expects adjusted diluted earnings* per ADS to be in the range of $2.18 to $2.41 versus $2.24 in fiscal 2018.
• Fiscal 2019 guidance includes the impact of IFRS 9, which is applicable to WNS effective April 1, 2018.  IFRS 9 requires companies to report cash flow hedging gains and losses on the revenue line, which WNS had previously reported on FX gain/loss line.  WNS’ fiscal 2019 guidance includes $1.7 million in revenue relating to this change, which has been removed from the constant currency* revenue growth calculation.  

“The company has provided our initial forecast for fiscal 2019 based on current visibility levels and exchange rates,” said Sanjay Puria, WNS’s Chief Financial Officer. “Our guidance for the year reflects growth in revenue less repair payments* of 8% to 14%, or 7% to 13% on a constant currency* basis.  Consistent with our guidance methodology in previous years, we enter fiscal 2019 with 90% visibility to the midpoint of the range. For the year, we expect capital expenditures to be approximately $30 million.”   

WNS will host a conference call on April 26, 2018 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 6695338. A replay will be available for one week following the call at +1-855-859-2056; international dial-in +1-404-537-3406; passcode 6695338, as well as on the WNS website, www.wns.com, beginning two hours after the end of the call.  

WNS (Holdings) Limited (NYSE: WNS), is a leading global business process management company. WNS offers business value to 350+ 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, 2018, WNS had 36,540 professionals across 54 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.  

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 2019 guidance, 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 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 ability to attract and retain clients; our liability arising from fraud or unauthorized disclosure of sensitive or confidential client and customer data; 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).

Source: Businesswire