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Ebix Inc Reports Operating Results (10-Q)

November 09, 2010 | About:
10qk

10qk

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Ebix Inc (EBIX) filed Quarterly Report for the period ended 2010-09-30.

Ebix Inc has a market cap of $921.8 million; its shares were traded at around $26.28 with a P/E ratio of 21.1 and P/S ratio of 9.4. Ebix Inc had an annual average earning growth of 57.8% over the past 5 years.
This is the annual revenues and earnings per share of EBIX over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of EBIX.


Highlight of Business Operations:

During the nine months ended September 30, 2010 the Company generated $33.8 million of net cash flow from our ongoing operating activities. The primary components of the cash provided by operations during this nine-month interim period consisted of net income of $43.1 million, net of $(7.0) million of net non-cash gains recognized on derivative instruments and foreign currency exchange, $4.4 million of depreciation and amortization, $(8.4) million of working capital requirements primarily associated with payments of trade payables and increased outstanding trade receivables, and $1.4 million of non-cash compensation.

Net cash used for investing activities during the nine months ended September 30, 2010 totaled $24.1 million, of which $2.9 million was used to acquire MCN in January 2010, $2.7 million was used to acquire Trades Monitor in April 2010, $1.3 million was used to acquire Connective Technologies in May 2010, $1.1 million was used to acquire E-Trek in July 2010, $6.9 million was used to acquire USIX in September 2010, $3.0 million was used to fulfill the second earn-out payment obligation to the former shareholders of ConfirmNet (a November 2008 business acquisition), $1.3 million was used for capital expenditures pertaining to the enhancement of our technology platforms and the purchases of operating equipment to support our expanding operations, and $5.0 million was used for investments in marketable securities (specifically bank certificates of deposit).

Net cash used for investing activities during the nine months ended September 30, 2009 totaled $24.4 million, of which $6.2 million was used for the May 2009 acquisition of Facts, $1.0 million was used to fulfill earn-out payment obligations to the former shareholders of IDS (a November 2007 business acquisition), $3.3 million was used to fulfill the first earn-out payment obligations to the former shareholders of ConfirmNet, and $1.9 million was used capital expenditures pertaining to the enhancement of our technology platforms. Also in September 2009 the Company made advance payment deposits totaling $11.9 million with respect to the then pending business acquisitions of E-Z Data and Peak which were later closed and effective in October 2009. Partially offsetting these uses of cash for investment purposes was $167 thousand of net proceeds from investments in marketable securities.

During the nine months ended September 30, 2010 net cash used in financing activities was $19.0 million. During this interim period $6.3 million of proceeds, net of principal repayments, were received from our term loan facility with Bank of America, N.A. (“BOA”), and $231 thousand was provided from the exercise of stock options. Offsetting these financing cash inflows was $12.0 million used to settle convertible debt elections, $10.7 million was used to complete open market repurchases of our common stock, $2.1 million was used to reduce the outstanding balance on our revolving credit facility with BOA, and $683 thousand was used to service existing capital lease obligations.

During the nine months ended September 30, 2009 the net cash provided by financing activities was $24.0 million. This financing cash inflow was comprised of $25.0 million from the proceeds of the two convertible debt issuances dated August 2009 and $1.5 million from the exercise of stock options. Partially offsetting those financing cash inflows was $1.1 million of payments against our than existing revolving line of credit facility with BOA line of credit (net of proceeds), $871 thousand used to service existing long-term debt and capital lease obligations, and $507 thousand was used to complete open market repurchases of our common stock.

In August 2009 the Company issued three convertible promissory notes raising a total of $25.0 million. Specifically on August 26, 2009 the Company entered into a Convertible Note Purchase Agreement with Whitebox in an original amount of $19.0 million, which amount is convertible into shares of common stock at a conversion price of $16.00 per share. The note has a 0.0% stated interest rate and no warrants were issued. The note is payable in full at its maturity date of August 26, 2011. Also on August 26, 2009 the Company entered into a Convertible Note Purchase Agreement with IAM Mini-Fund 14 Limited, a fund managed by Whitebox, in an original amount of $1.0 million, which amount is convertible into shares of common stock at a conversion price of $16.00 per share. The note has a 0.0% stated interest rate and no warrants were issued. The note is payable in full at its maturity date of August 26, 2011. Finally, on August 25, 2009 the Company entered into a Convertible Note Purchase Agreement with the Rennes Foundation in an original amount of $5.0 million, which amount is convertible into shares of common stock at a conversion price of $16.66 per share. The note has a 0.0% stated interest rate and no warrants were issued. The note is payable in full at its maturity date of August 25, 2011. The Company applied imputed interest on these convertible notes using an interest rate of 1.75% and discounted their carrying value accordingly. As of and for the nine months ending September 30, 2010 the Company recognized $303 thousand of interest expense and the unamortized discount was $241 thousand. With respect to each of these convertible notes, and in accordance with the terms of the notes, as understood between the Company and each of the holders, upon a conversion election by the holder the Company must satisfy the related original principal balance in cash and may satisfy the conversion spread (that being the excess of the conversion value over the related original principal component) in either cash or stock at option of the Company. During the three months ended September 30, 2010 Whitebox VSC, Ltd and IAM Mini-Fund 14 Limited elected to convert $9.5 million of their August 26, 2009 Convertible Promissory Notes. The Company settled these conversion elections by paying $9.5 million in cash with respect to the principal component, paying $2.5 million in cash for a portion of the conversion spread and issuing 58,357 shares of Ebix common stock for the remainder of the conversion spread. Furthermore, subsequent to the end of our third quarter ending September 30, 2010 and thru November 8, 2010 Whitebox VSC, Ltd and IAM Mini-Fund 14 Limited elected to convert the remaining $10.5 million of their August 26, 2009 Convertible Promissory Notes. The Company settled these conversion elections by paying $10.5 million in cash with respect to the principal component and issuing 225,000 shares of Ebix common stock for the conversion spread.

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