EXL announces $125 million accelerated share repurchase program

Rhea-AI Summary

EXL announces an accelerated share repurchase agreement with Citibank, N.A. to repurchase $125 million of the company's common stock, reflecting a commitment to maximizing stockholder value and driving innovation and growth.

Insights

Financial Analyst

The announcement by EXL regarding the accelerated share repurchase (ASR) agreement with Citibank for $125 million represents a strategic move to bolster shareholder value. This transaction indicates that EXL is confident in its financial stability and future prospects, as share repurchases often signal to the market that the company's leadership believes its stock is undervalued. By reducing the number of shares outstanding, the company effectively increases earnings per share (EPS), which can have a positive impact on the stock price.

EXL's decision to fund this repurchase with cash on hand or potential borrowing could suggest a strong liquidity position, but it also warrants monitoring the company's leverage ratios post-transaction. It's imperative to consider the balance between returning value to shareholders and maintaining financial flexibility, especially in the context of the company's ongoing $500 million stock repurchase program.

Market Research Analyst

EXL’s engagement in an ASR signals a proactive approach to capital management that aligns with its data- and AI-led strategy. This move could be perceived positively by the market as it reflects the company's commitment to operational efficiencies and growth. For investors, the key takeaway is the potential for stock price appreciation due to the reduced share float.

However, it's essential to contextualize this repurchase within the broader industry trends. Companies in the tech and data analytics sector are increasingly investing in innovation to stay competitive. EXL's emphasis on delivering value through a differentiated strategy may resonate well with clients and investors, but the effectiveness of these strategies in driving long-term growth remains to be seen. Investors should consider how EXL's capital allocation compares with industry peers and whether it supports sustainable competitive advantages.

Corporate Governance Expert

EXL's ASR is indicative of a shareholder-oriented corporate governance approach. This method of repurchasing shares is often faster than traditional buybacks and can be an efficient way to return capital to shareholders. Nonetheless, it's important for stakeholders to assess the governance implications of such transactions. The board's decision-making process in determining the size and timing of the buyback should be transparent, ensuring that it aligns with the company's long-term strategic goals and does not prioritize short-term stock price gains over necessary capital investments.

Additionally, the impact of the ASR on the company's overall share liquidity and voting power concentration should be evaluated. These factors can influence corporate control dynamics and affect minority shareholder interests. A thorough analysis of the ASR terms, including the discount applied and the potential adjustments, is essential to understand the full implications of the repurchase on shareholder value.

NEW YORK, March 18, 2024 (GLOBE NEWSWIRE) -- EXL [NASDAQ: EXLS], a leading data analytics and digital operations and solutions company, today announced that, as part of its capital allocation program, it has entered into an accelerated share repurchase agreement (the “ASR”) with Citibank, N.A. to repurchase $125 million of the company’s common stock.

“Embracing a differentiated data- and AI-led strategy has empowered EXL to provide a richer value proposition for our clients, enhancing operational efficiencies, improving customer service and delivering value at an accelerated pace,” said Rohit Kapoor, vice chairman and chief executive officer of EXL. “The ASR reflects our steadfast dedication to maximizing stockholder value while driving innovation and growth.”

Under the ASR, the company will pay an aggregate amount of $125 million to Citibank for an initial number of shares of the company’s common stock at the beginning of the transaction. The company plans to fund the repurchase with available cash on hand and/or borrowing from its credit facility. The ultimate number of shares of common stock that the company will repurchase under the ASR Agreement will be based on the average of the daily volume-weighted average prices of the common stock during the term of the ASR, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR. The ASR is a part of the company’s current $500 million stock repurchase program.

About EXL

EXL (NASDAQ: EXLS) is a leading data analytics and digital operations and solutions company. We partner with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed. EXL harnesses the power of data, analytics, AI, and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect. We are headquartered in New York and have more than 54,000 employees spanning six continents. For more information, visit www.exlservice.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to EXL's operations and business environment, all of which are difficult to predict and many of which are beyond EXL’s control. Forward-looking statements include information concerning EXL’s possible or assumed future results of operations, including descriptions of its business strategy. These statements may include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although EXL believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect EXL’s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors, which include our ability to maintain and grow client demand, our ability to hire and retain sufficiently trained employees, and our ability to accurately estimate and/or manage costs, rising interest rates, rising inflation and recessionary economic trends, are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K. You should keep in mind that any forward-looking statement made herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect EXL. EXL has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

© 2024 ExlService Holdings, Inc.  All rights reserved. For more information go to www.exlservice.com/legal-disclaimer

Contacts
Media
Keith Little
+1 703-598-0980
media.relations@exlservice.com

Investor Relations
John Kristoff
+1 212 209 4613
IR@exlservice.com

FAQ

What is the purpose of EXL's accelerated share repurchase agreement with Citibank, N.A.?

The purpose is to repurchase $125 million of the company's common stock as part of its capital allocation program.

How will EXL fund the share repurchase?

EXL plans to fund the repurchase with available cash on hand and/or borrowing from its credit facility.

What determines the ultimate number of shares of common stock that EXL will repurchase under the ASR Agreement?

The ultimate number of shares will be based on the average of the daily volume-weighted average prices of the common stock during the term of the ASR, less a discount.

What is the total value of EXL's current stock repurchase program?

The current stock repurchase program is worth $500 million.