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ASGN Incorporated Reports Third Quarter 2020 Results

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ASGN Incorporated (NYSE: ASGN), one of the foremost providers of information technology (IT) and professional services in the technology, digital, creative, engineering, life sciences fields across commercial and government sectors, reported financial results for the quarter ended September 30, 2020.

Highlights

  • Revenues were $1.01 billion, up 0.9 percent year-over-year and up 8.0 percent sequentially
  • Net income was $52.3 million ($0.99 per diluted share), down 8.9 percent year-over-year and up 7.2 percent sequentially
  • Adjusted Net Income (a non-GAAP measure) was $67.1 million ($1.27 per diluted share), down 3.7 percent year-over-year and up 8.8 percent sequentially
  • Free Cash Flow (a non-GAAP measure) was $81.9 million, or 8.1 percent of revenues
  • Adjusted EBITDA (a non-GAAP measure) was $113.3 million (11.2 percent of revenues), compared with $121.5 million (12.1 percent of revenues) in the third quarter of 2019
  • On August 31, 2020, acquired LeapFrog Systems, Inc., a specialized consultancy providing enterprise-scale digital business transformation services to Fortune 500 clients
  • On October 1, 2020, acquired Skyris LLC, one of the largest providers of remote sensing and data science expertise in support of defense and national security programs
  • Cash and cash equivalents were $229.7 million at quarter end and there were no outstanding borrowings under the Company’s $250.0 million revolving credit facility
  • Senior Secured Debt leverage ratio (a non-GAAP measure) was 1.13 to 1 at September 30, 2020 (maximum allowable Senior Secured Debt leverage ratio of 4.25 to 1)

Management Commentary

ASGN reported strong results for the third quarter of 2020, with both revenues and Adjusted EBITDA exceeding our expectations, said ASGN President and Chief Executive Officer, Ted Hanson. We witnessed very balanced growth in Q3, with week-over-week improvements across all of our operating segments. The ECS Segment, our federal government business, saw better-than-expected results, with revenues up 40 percent year-over-year, while the Apex Segment, the largest offering within our commercial business, achieved solid sequential improvement for the quarter, and consulting revenues returned to double-digit growth. Our commercial work, in particular, is making a strong turnaround as customers continue to move forward on their strategic technology roadmaps. We believe that this steady growth during the third quarter is sound evidence that our business hit trough levels in the second quarter and is now on a clear upward trajectory.

Mr. Hanson added, ASGN continues to evolve to meet the critical IT needs of our customers through both the organic growth of our current businesses as well as through strategic, tuck-in acquisitions. In the third quarter, and just subsequent to quarter end, we welcomed LeapFrog Systems, Inc. and Skyris LLC to our Apex and ECS Segments, respectively, broadening our capabilities, adding new customers and expanding our contract vehicles. Our acquisition pipeline remains strong, and going forward we will continue to focus on bringing more capabilities into our organization to better serve each of our customers. Following this strong quarterly performance, I remain bullish on the existing and emerging opportunities for ASGN. We have the right capabilities and industry expertise to meet the evolving needs of our large and diverse customer base.

Third Quarter 2020 Financial Results – Summary(1)

 

Q3

 

 

 

% Change

(In millions, except per share data)

2020

 

2019

 

Q2 2020

 

Y-Y

 

Sequential

Revenues

 

 

 

 

 

Commercial

$

723.3

 

$

796.6

 

$

697.1

 

(9.2

)%

3.7

%

Federal Government

288.6

 

206.1

 

239.7

 

40.0

%

20.4

%

 

$

1,011.9

 

$

1,002.7

 

$

936.8

 

0.9

%

8.0

%

Gross Margin

 

 

 

 

 

Commercial

31.1

%

31.9

%

31.1

%

 

 

Federal Government

15.9

%

18.1

%

18.3

%

 

 

Consolidated

26.8

%

29.1

%

27.8

%

 

 

Contract Gross Margin(2)

 

 

 

 

 

Commercial

28.7

%

28.6

%

29.0

%

 

 

Federal Government

15.9

%

18.1

%

18.3

%

 

 

Consolidated

25.0

%

26.4

%

26.2

%

 

 

 

 

 

 

 

 

Net Income

$

52.3

 

$

57.4

 

$

48.8

 

(8.9

)%

7.2

%

Earnings per diluted share

$

0.99

 

$

1.08

 

$

0.92

 

(8.3

)%

7.6

%

Cash provided by operating activities

$

87.6

 

$

91.3

 

$

186.1

 

(4.1

)%

(52.9

)%

 

 

 

 

 

 

Non-GAAP Financial Measures(3)

 

 

 

 

 

Adjusted Net Income

$

67.1

 

$

69.7

 

$

61.7

 

(3.7

)%

8.8

%

Adjusted Net Income per diluted share

$

1.27

 

$

1.31

 

$

1.17

 

(3.1

)%

8.5

%

Adjusted EBITDA

$

113.3

 

$

121.5

 

$

106.2

 

(6.7

)%

6.7

%

Free Cash Flow

$

81.9

 

$

84.4

 

$

178.8

 

(3.0

)%

(54.2

)%

__________

(1)

The Commercial business is comprised of the Apex and Oxford Segments and the Federal Government business is the ECS segment.

(2)

Excludes permanent placement gross margin.

(3)

Reconciliations of net income to non-GAAP financial measures and descriptions of these measures are included in the tables and the Non-GAAP Financial Measures section that accompany this release.

 

Consolidated revenues for the quarter were up slightly over the third quarter of 2019 and up 8.0 percent sequentially. Growth in the quarter was primarily from our federal government business (ECS Segment), which experienced significant growth both year-over-year and sequentially. Commercial revenues (Apex and Oxford Segments) were down year-over-year and up from the second quarter of 2020.

Commercial revenues accounted for 71.5 percent of consolidated revenues and were down 9.2 percent year-over-year primarily as a result of lower customer demand attributable to the COVID-19 pandemic. Commercial revenues for the quarter benefited from an additional Billable Day (64.0 Billable Days, up from 63.0 in Q3 of 2019). Changes in foreign exchange rates had a minimal effect on revenues for the third quarter. On a sequential basis, commercial revenues were up 3.7 percent over the second quarter of 2020 and all commercial divisions experienced steady growth in weekly revenues from “trough” production levels that occurred mid-second quarter.

The Company’s predominately commercial IT services divisions (Apex Systems and Oxford Core), which together accounted for 87.5 percent of commercial revenues, were down 5.0 percent year-over-year but increased 3.1 percent sequentially. Creative marketing and permanent placement divisions (Creative Circle and CyberCoders), which combined accounted for 12.5 percent of commercial revenues, were down 30.6 percent year-over-year but increased 8.2 percent sequentially.

Revenues from our federal government business accounted for 28.5 percent of consolidated revenues and were up 40.0 percent year-over-year and up 20.4 percent sequentially. This increase was driven by a number of factors including increased volume from existing programs (mainly artificial intelligence and machine learning “AI/ML” solutions and development/expansion of unclassified networks), new contract awards and the contribution from Blackstone Federal, which was acquired in January 2020.

Gross profit was $271.0 million, down $20.4 million year-over-year. Gross margin was 26.8 percent compared with 29.1 percent in the third quarter of 2019. The year-over-year compression in gross margin resulted mainly from changes in business mix related to the high growth in revenues under cost reimbursable contracts (mainly AI/ML solutions and development/expansion of unclassified networks) for the federal government and the precipitous decline in creative marketing and permanent placement revenues, which are the Company’s highest margin revenue streams.

Gross margin on commercial revenues was 31.1 percent, down from 31.9 percent in the third quarter of 2019. Most of the decline related to lower permanent placement revenues, which accounted for 2.4 percent of total revenues in the quarter, compared with 3.6 percent in the third quarter of 2019. The contract gross margin (which excludes the effects of permanent placement revenues) on commercial revenues was 28.7 percent for the quarter, up slightly over the third quarter of 2019.

Gross margin on revenues from federal government services was 15.9 percent, down from 18.1 percent in the third quarter of 2019. This margin compression related to change in business mix stemming from the high growth in revenues from cost reimbursable contracts, particularly those involving AI/ML solutions and the development and expansion of unclassified networks. These contracts typically carry lower gross margins than services provided under firm-fixed-price or time and materials contracts because they include a higher complement of third-party hardware, software and subcontracted labor. Although these solutions have lower gross margins, they require less overhead support and consequently have a lower level of SG&A expense related to delivering the solution.

Selling, general and administrative (SG&A) expenses were $177.2 million (17.5 percent of revenues), compared with $188.6 million (18.8 percent of revenues) in the third quarter of 2019. This improvement related to effective expense management by our operating units and lower incentive compensation expense.

Interest expense was $9.3 million, down from $12.7 million in the third quarter of 2019. The reduction related to the drop in LIBOR and lower amortization of deferred loan costs.

Net income was $52.3 million, a decrease of 8.9 percent year-over-year. This decrease related to the year-over-year decline in commercial revenues and gross profit from lower demand attributable to the COVID-19 pandemic.

Liquidity and Capital Resources

The Company’s primary source of liquidity is cash flows from operating activities, which have been sufficient to fund working capital and capital expenditure requirements. During the third quarter, the Company generated $87.6 million in cash flows from operating activities, which benefited from the deferral of the payment of approximately $29.7 million in FICA payroll taxes pursuant to the provisions of the CARES Act.

At September 30, 2020, the Company had:

  • Cash and cash equivalents of $229.7 million;
  • Full availability under our $250.0 million Senior Secured Revolving Credit Facility;
  • Outstanding Senior Secured Debt of $490.8 million (term B loan facility due 2025); and
  • Senior unsecured notes totaling $550.0 million at 4.625 percent (due 2028)

Borrowings under the Companys $250.0 Senior Secured Revolving Credit Facility are limited to a maximum Senior Secured Debt leverage ratio (ratio of Senior Secured Debt to trailing 12 months Adjusted EBITDA) of 4.25 to 1.0 in 2020. At September 30, 2020, the Company’s Senior Secured Debt leverage ratio was 1.13 to 1.0.

No principal payments are due on any of the Companys borrowings until maturity.

Fourth Quarter 2020 Financial Estimates

The Company is providing financial estimates for the fourth quarter of 2020, which are based on recent operating trends in the business and assume no significant deterioration in the markets ASGN serves. These estimates do not include any acquisition, integration or strategic planning expenses and assume no significant change in current foreign exchange rates. Full company financial estimates and reconciliations of estimated net income to the estimated non-GAAP financial measures are included in the tables that accompany this release.

(In millions, except per share data)

Low

High

Revenues

$

968.0

 

$

988.0

 

SG&A expenses(1)

$

174.3

 

$

176.6

 

Net income

$

44.4

 

$

48.1

 

Earnings per diluted share

$

0.83

 

$

0.90

 

Diluted shares outstanding

53.4

 

53.4

 

Gross margin

26.7

%

26.9

%

Effective tax rate(2)

27.0

%

27.0

%

 

 

 

Non-GAAP Financial Measures:

 

 

Adjusted EBITDA

$

101.0

 

$

106.0

 

Adjusted Net Income(3)

$

58.3

 

$

61.9

 

Adjusted Net Income per diluted share(3)

$

1.09

 

$

1.16

 

___________

(1)

Excludes amortization of intangible assets and includes $8.4 million in stock-based compensation and $7.3 million in depreciation.

(2)

Estimated effective tax rate before any excess tax benefits related to stock-based compensation.

(3)

Does not include the Cash Tax Savings on Indefinite-lived Intangible Assets. These savings total $7.4 million each quarter, or $0.14 per diluted share, and represent the economic value of the tax deduction that ASGN receives from the amortization of goodwill and trademarks.

 

The financial estimates above are based on an estimate of Billable Days, which are Business Days (calendar days for the period less weekends and holidays) adjusted for other factors, such as the day of the week a holiday occurs, additional time taken off around holidays, year-end client furloughs and inclement weather. For the fourth quarter of 2020, the number of “Billable Days” is estimated to be 60.5, which is the same as the fourth quarter of 2019 and 3.5 fewer days than the third quarter of 2020.

For the commercial business, revenues are expected to be flat-to-down sequentially because of 3.5 fewer Billable Days in the fourth quarter compared with the third quarter. Each Billable Day was approximately $11.3 million in the third quarter of 2020. Revenues per Billable Day are estimated to increase approximately 4.0 to 4.5 percent sequentially.

For the federal government business, revenues are expected to be up slightly more than 10 percent year-over-year despite a very high Q4 2019 comparable. As previously reported, revenues for Q4 2019 were up over 30 percent year-over-year and included $34.4 million from the early renewal of software licenses. Sequentially, revenues are expected to be down because of 3.5 fewer Billable Days and lower revenues on certain cost reimbursable contracts, which experienced high volumes in the third quarter of 2020 and are expected to return to lower levels of spending in the fourth quarter.

Conference Call

The Company will hold a conference call today at 4:30 p.m. ET to review its financial results for the third quarter. The dial-in number is 877-407-0792 (+1-201-689-8263 for callers outside the United States), and the conference ID number is 13709885. Participants should dial in ten minutes before the call. The prepared remarks, supplemental materials and webcast for this call can be accessed at asgn.com.

A replay of the conference call will be available beginning October 28, 2020 at 8:00 p.m. ET until November 11, 2020. The access number for the replay is 844-512-2921 (+1-412-317-6671 for callers outside the United States) and the conference ID number is 13709885.

About ASGN Incorporated

ASGN Incorporated (NYSE: ASGN) is one of the foremost providers of IT and professional services in the technology, digital, creative, engineering and life sciences fields across commercial and government sectors. Operating through its Apex, Oxford and ECS segments, ASGN helps leading corporate enterprises and government organizations develop, implement and operate critical IT and business solutions through its integrated offering of professional staffing and IT solutions. ASGN’s mission is to be the most trusted partner for companies seeking highly skilled human capital and integrated solutions to fulfill their strategic and operational needs. For more information, visit us at asgn.com.

Safe Harbor

Certain statements made in this news release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a high degree of risk and uncertainty. Forward-looking statements include statements regarding our anticipated financial and operating performance.

All statements in this news release, other than those setting forth strictly historical information, are forward-looking statements. Forward-looking statements are not guarantees of future performance and actual results might differ materially. In particular, we make no assurances that the proposed revenue scenarios outlined above will be achieved. Additional examples of forward-looking statements in this press release include, without limitation, statements regarding the expected impact of the COVID-19 global pandemic on our competitive position and demand for our services; our ability to attract, train and retain qualified staffing consultants, the availability of qualified contract professionals, management of our growth, continued performance and improvement of our enterprise-wide information systems, our ability to manage our litigation matters, the successful integration of our acquired subsidiaries and other risks detailed from time to time in our reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC on March 2, 2020 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, as filed with the SEC on May 11, 2020 and August 10, 2020, respectively. We specifically disclaim any intention or duty to update any forward-looking statements contained in this news release.

CONSOLIDATED SELECTED FINANCIAL DATA (Unaudited)

(In millions, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

June 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2020

 

2019

Results of Operations:

 

 

 

 

 

Revenues

$

1,011.9

 

$

1,002.7

 

$

936.8

 

$

2,939.2

 

$

2,898.7

 

Costs of services

740.9

 

711.3

 

676.0

 

2,126.5

 

2,058.2

 

Gross profit

271.0

 

291.4

 

260.8

 

812.7

 

840.5

 

Selling, general and administrative expenses

177.2

 

188.6

 

172.2

 

547.3

 

574.8

 

Amortization of intangible assets

12.9

 

11.9

 

12.6

 

37.6

 

38.8

 

Operating income

80.9

 

90.9

 

76.0

 

227.8

 

226.9

 

Interest expense

(9.3

)

(12.7

)

(9.7

)

(30.4

)

(41.2

)

Income before income taxes

71.6

 

78.2

 

66.3

 

197.4

 

185.7

 

Provision for income taxes

19.3

 

20.7

 

17.5

 

52.5

 

50.2

 

Income from continuing operations

$

52.3

 

$

57.5

 

$

48.8

 

$

144.9

 

$

135.5

 

Net income

$

52.3

 

$

57.4

 

$

48.8

 

$

144.9

 

$

135.4

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

$

1.00

 

$

1.09

 

$

0.93

 

$

2.75

 

$

2.57

 

Diluted

$

0.99

 

$

1.08

 

$

0.92

 

$

2.73

 

$

2.54

 

 

 

 

 

 

 

Number of shares and share equivalents used to calculate earnings per share:

 

 

 

 

 

Basic

52.5

 

52.8

 

52.5

 

52.6

 

52.7

 

Diluted

53.0

 

53.4

 

53.0

 

53.1

 

53.4

 

 

 

 

 

 

 

Summary Cash Flow Data:

 

 

 

 

 

Cash provided by operating activities

$

87.6

 

$

91.3

 

$

186.1

 

$

337.8

 

$

231.8

 

Capital expenditures

(5.7

)

(6.9

)

(7.3

)

(28.3

)

(22.8

)

Free Cash Flow (non-GAAP measure)

$

81.9

 

$

84.4

 

$

178.8

 

$

309.5

 

$

209.0

 

 

 

 

 

 

 

Cash used in investing activities

$

(71.7

)

$

(6.1

)

$

(7.4

)

$

(180.1

)

$

(71.4

)

Cash provided by (used in) financing activities

$

4.8

 

$

(57.1

)

$

(35.3

)

$

(24.4

)

$

(134.0

)

 

 

 

 

 

 

 

September 30, 2020

December 31, 2019

 

 

 

Summary Balance Sheet Data:

 

 

 

 

 

Cash and cash equivalents

$

229.7

 

$

95.2

 

 

 

 

Total current assets

934.7

 

791.5

 

 

 

 

Goodwill and intangible assets, net

2,087.7

 

1,963.4

 

 

 

 

Total assets

3,211.6

 

2,941.4

 

 

 

 

Total current liabilities

389.4

 

340.9

 

 

 

 

Working capital

545.3

 

450.6

 

 

 

 

Long-term debt

1,033.2

 

1,032.3

 

 

 

 

Total stockholders equity

1,524.2

 

1,376.2

 

 

 

 

 

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Unaudited)

(In millions, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2020

 

2019

Net income

$

52.3

$

57.4

$

48.8

$

144.9

$

135.4

Loss from discontinued operations, net of tax

0.1

0.1

Interest expense

9.3

12.7

9.7

30.4

41.2

Provision for income taxes

19.3

20.7

17.5

52.5

50.2

Depreciation

9.8

10.3

9.0

28.1

30.0

Amortization of intangible assets

12.9

11.9

12.6

37.6

38.8

EBITDA (non-GAAP measure)

103.6

113.1

97.6

293.5

295.7

Stock-based compensation

7.1

7.7

8.1

23.9

31.1

Write-off of intangible assets

3.3

Acquisition, integration and strategic planning expenses

2.6

0.7

0.5

5.6

2.7

Adjusted EBITDA (non-GAAP measure)(1)

$

113.3

$

121.5

$

106.2

$

323.0

$

332.8

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

June 30,

 

September 30,

 

2020

 

2019

 

2020

 

2020

 

2019

Net income

$

52.3

 

$

57.4

 

$

48.8

 

$

144.9

 

$

135.4

 

Loss from discontinued operations, net of tax

 

0.1

 

 

 

0.1

 

Acquisition, integration and strategic planning expenses

2.6

 

0.7

 

0.5

 

5.6

 

2.7

 

Write-off of intangible assets

 

 

 

 

3.3

 

Tax effect on adjustments

(0.6

)

(0.1

)

(0.1

)

(1.4

)

(1.5

)

Non-GAAP net income

54.3

 

58.1

 

49.2

 

149.1

 

140.0

 

Amortization of intangible assets

12.9

 

11.9

 

12.6

 

37.6

 

38.8

 

Income taxes on amortization for financial reporting purposes not deductible for income tax purposes

(0.1

)

(0.3

)

(0.1

)

(0.2

)

(0.8

)

Adjusted Net Income (non-GAAP measure)(2)

$

67.1

 

$

69.7

 

$

61.7

 

$

186.5

 

$

178.0

 

 

 

 

 

 

 

Per diluted share:

 

 

 

 

 

Net income

$

0.99

 

$

1.08

 

$

0.92

 

$

2.73

 

$

2.54

 

Adjustments

0.28

 

0.23

 

0.25

 

0.78

 

0.79

 

Adjusted Net Income (non-GAAP measure)(2)

$

1.27

 

$

1.31

 

$

1.17

 

$

3.51

 

$

3.33

 

 

 

 

 

 

 

Common shares and share equivalents (diluted)

53.0

 

53.4

 

53.0

 

53.1

 

53.4

 

_________

(1)

The Company’s calculation of Adjusted EBITDA also excludes write-off of loan costs and impairment charges; however, these were zero for all periods presented.

(2)

The Company’s calculation of Adjusted Net Income also excludes write-off of loan costs, impairment charges and accretion of fair value discount on contingent consideration; however, these were zero for all periods presented. Adjusted Net Income does not include the Cash Tax Savings on Indefinite-lived Intangible Assets, which currently total $7.4 million per quarter (approximately $0.14 per diluted share) and represent the economic value of the tax deduction from the amortization of goodwill and trademarks.

 

FINANCIAL ESTIMATES FOR THE FOURTH QUARTER OF 2020

RECONCILIATIONS OF ESTIMATED GAAP TO NON-GAAP MEASURES

(In millions, except per share data)

 

 

 

Low

 

High

Net income(1)

$

44.4

$

48.1

Interest expense

9.3

9.3

Provision for income taxes(2)

16.4

17.7

Depreciation expense(3)

8.5

8.5

Amortization of intangible assets

14.0

14.0

EBITDA (non-GAAP measure)

92.6

97.6

Stock-based compensation

8.4

8.4

Adjusted EBITDA (non-GAAP measure)

$

101.0

$

106.0

 

 

Low

High

Net income(1)

$

44.4

$

48.1

Amortization of intangible assets

14.0

14.0

Income taxes on amortization for financial reporting purposes not deductible for income tax purposes

(0.1)

(0.2)

Adjusted Net Income (non-GAAP measure)(4)

$

58.3

$

61.9

 

 

 

Per diluted share:

 

 

Net income

$

0.83

$

0.90

Adjustments

0.26

0.26

Adjusted Net Income (non-GAAP measure)(4)

$

1.09

$

1.16

 

 

 

Common shares and share equivalents (diluted)

53.4

53.4

_________

(1)

This estimate does not include acquisition, integration and strategic planning expenses, or excess tax benefits related to stock-based compensation.

(2)

Estimated effective tax rate is 27.0 percent and does not include excess tax benefits related to stock-based compensation.

(3)

Comprised of $7.3 million of depreciation included in SG&A expenses and $1.2 million of depreciation included in costs of services.

(4)

Does not include the Cash Tax Savings on Indefinite-lived Intangible Assets. These savings total $7.4 million per quarter ($0.14 per diluted share) and represent the economic value of the tax deduction from the amortization of goodwill and trademarks.

 

Non-GAAP Financial Measures

Statements in this release and the accompanying financial information include non-GAAP financial measures that are provided as additional information to enhance the overall understanding of the Company’s current financial performance and not as an alternative to the consolidated interim financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Management uses these non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Free Cash Flow, Senior Secured Debt Leverage Ratio and Revenues on a same Billable Days and Constant Currency basis) to evaluate the Company’s financial performance. These terms might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures reported by other companies. The financial information tables that accompany this press release include reconciliations of net income to non-GAAP financial measures.

EBITDA and Adjusted EBITDA provide a measure of the Company’s operating results in a manner that is focused on the performance of the Company’s core business on an ongoing basis, by removing the effects of non-operating and certain non-cash expenses. These non-operating and non-cash items are specifically identified in the reconciliations of GAAP measures to Non-GAAP measures that accompany this release.

Adjusted Net Income provides a method for assessing the Company’s operating results in a manner that is focused on the performance of the Company’s core business on an ongoing basis by removing the effects of non-operating and certain non-cash expenses, adjusted for some of the cash flows associated with amortization of intangible assets to more fully present the performance of the Company’s acquisitions. The calculation of Adjusted Net Income is presented in the reconciliations of GAAP measures to Non-GAAP measures that accompany this release.

Free Cash Flow provides useful information to investors about the amount of cash generated by the business that can be used for strategic opportunities and is computed as presented in the tables that accompany this release.

The Senior Secured Debt Leverage Ratio is a ratio of the Company’s Senior Secured Debt to trailing 12 months Adjusted EBITDA and provides information about the Company’s compliance with loan covenants.

Revenues calculated on a Same Billable Days and Constant Currency basis provide more comparable information by removing the effect of differences in the number of billable days and changes in currency exchange rates on a year-over-year basis. Revenues on a Same Billable Days basis are adjusted for the following items: differences in billable days during the period by taking the current-period average revenue per billable day, multiplied by the number of billable days from the same period in the prior year; Billable Days are business days (calendar days for the period less weekends and holidays) adjusted for other factors, such as the day of the week a holiday occurs, additional time taken off around holidays, year-end client furloughs and inclement weather. To calculate revenues on Constant Currency basis, reported revenues are re-translated using foreign exchange rates from the comparable prior year period.

Ed Pierce

Chief Financial Officer

818-878-7900

ADDO Investor Relations

Kimberly Esterkin

310-829-5400 / [email protected]

News

OKEx resumes withdrawals of digital assets

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VALLETTA, Malta, Nov. 27, 2020 /PRNewswire/ — OKEx (www.okex.com), a world-leading cryptocurrency spot and derivatives exchange, has restored its full range of services for its users by reopening withdrawals of all digital assets as of 8:00 am UTC, Nov. 26. The OKEx team ran comprehensive security checks prior to resuming normal operations of the hot wallet system to ensure the safety of users' funds.

As part of its continued pledge to full transparency, OKEx has always maintained 100% of reserves since its inception. As such, users are able to withdraw funds with no restrictions. Alongside reopening withdrawals, the Malta-based exchange is offering generous loyalty rewards for users as a gesture of appreciation for their support and understanding during this time. 

While all other operations of the exchange remained unaffected, withdrawals from OKEx were temporarily suspended on Oct. 16 to guarantee the safety of users' assets, which remains OKEx's number-one priority at all times. Over the years, the exchange has gained unrivaled experience in safely operating digital wallets, assets and transactions with no major security incidents. 

“We are pleased to be back to operating at full capacity, with all trading activity, deposits and withdrawals functioning as expected and security measures in place to ensure the safety of user assets. Beyond continuing to provide more diverse products, trading tools and innovative solutions for our customers, the security of their funds is our primary concern,” said OKEx CEO Jay Hao

OKEx maintains rigorous security standards to ensure the safety of digital assets through a combination of cold storage and a hot wallet system that is protected by the exchange's online and semi-online risk-management systems, semi-offline multisignature services, big data risk-management systems and other protection mechanisms. Working together, they check for abnormal behaviors in transaction amount or frequency and delay or refuse any transactions deemed suspicious, thereby quickly preventing large withdrawals from malicious actors.

The exchange also has an extensive backup mechanism in place for private key holders to ensure that each holder can trigger the activation of the backup private key in the event of long-term incapacitation, such as death or memory loss. On this occasion, however, OKEx had failed to take other specific scenarios into account, such as private key holders becoming unreachable due to unforeseen circumstances. 

“We are working hard to restore user trust and will be rolling out a solution to improve our internal processes so that we can try our best to prevent this type of situation from happening in the future,” Jay Hao added.

OKEx has secured its reputation and position as a world-leading exchange through its continued innovation and diverse product offering as well as strict adherence to laws and regulations around the world, establishing robust Know Your Customer checks and anti-money laundering mechanisms. Building on its solid platform and loyal user base in conjunction with continued collaboration with regulators, OKEx looks forward to continuing to serve customers and furthering the development of the blockchain space.

About OKEx

A world-leading cryptocurrency spot and derivatives exchange, OKEx offers the most diverse marketplace where global crypto traders, miners and institutional investors come to manage crypto assets, enhance investment opportunities and hedge risks. We provide spot and derivatives trading — including futures, perpetual swap and options — of major cryptocurrencies, offering investors flexibility in formulating their strategies to maximize gains and mitigate risks.

                                                

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SOURCE OKEx

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OneConnect Financial Technology cements presence in Malaysia with new entity; Launch graced by MDEC

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SHENZHEN, China, Nov. 26, 2020 /PRNewswire/ — OneConnect Financial Technology Co., Ltd. (NYSE: OCFT), the leading technology-as-a-service platform provider and an associate of Ping An Insurance Group, reaffirms its commitment as the trusted tech partner for financial institutions in Malaysia with the launch of its new entity, OneConnect Smart Technology (Malaysia) Sdn Bhd. In line with its Southeast Asia expansion strategy, Malaysia is a key growth engine where OneConnect plans to build a local team that stands ready to serve financial institutions across Malaysia and support its regional projects. The launch was graced by Dato' Ng Wan Peng, Chief Operating Officer of the Malaysia Digital Economy Corporation (MDEC).

Malaysia's fintech space is thriving

Bank Negara Malaysia (BNM) has launched several initiatives in a move to embrace financial inclusion and the shift in banking habits towards digital channels. These include the announcement last year that it will issue new digital banking licenses and the publication of an Electronic Know-Your-Customer (eKYC) guideline on 30 June 2020. The move has given a boost to the nation's banking and fintech players that are ready to accelerate digital transformation and adopt fintech innovations.

“Fintech had garnered lots of attention for its astonishing potential in impacting lives and changing economies. Since it appeared, fintech helped enable ordinary people to access financial products securely and efficiently. At the same time, it also accelerated the economic growths of many countries. In order to enhance the development of the fintech ecosystem for this country, the Malaysia Digital Economy Corporation (MDEC) will continue to engage start-ups, investors and innovators from around the world to yield positive outcomes via its continuous efforts in expanding and innovating the fintech industry. As OneConnect has established a regional presence in Malaysia, it reinforces the fact that Malaysia is an attractive investment destination. In fact, many fintech and data ecosystem players come to Malaysia specifically for its vibrant testbed environment and the multi-cultural background of its talent pool and their digital savviness and language proficiency in technical subjects,” shared Dato' Ng Wan Peng, Chief Operating Officer, MDEC.

According to the e-Conomy SEA 2020 Report[1], consumers and SMEs have adopted digital financial services like never before. In Malaysia, over the various Movement Control Order periods, many turned to the Internet for solutions to their challenges. A significant number tried new digital services – 36 per cent of all digital service consumers were new – with 92 per cent of these new consumers intending to continue their behaviour post-pandemic. Year-to-date, Malaysia has also seen a 33 per cent monthly active user growth for select mobile banking apps.

The scene is an important preamble to the ongoing digital transformation taking place in the financial landscape and it signifies a positive sign for OneConnect who has market-ready solutions for insurtech and full-stack digital banking technologies including end-to-end frictionless account opening and onboarding, smart lending, and an eKYC solution that recognises MyKad.

Committed to the growth of Malaysia's financial sector

OneConnect is committed to being the trusted tech enabler in digital transformation for financial institutions.

Backed by Ping An's 32 years of experience in the financial industry and an extensive track record as the tech enabler, OneConnect is able to bring to Malaysia the breadth and depth of proven solutions, and journey with its clients through their digital transformation roadmap.

Echoing the same, Tan Bin Ru, CEO (Southeast Asia) of OneConnect Financial Technology, said, “Malaysia is of strategic importance to OneConnect. The country is home to five local banks that are 20 of Southeast Asia's largest banks, enjoying strong regional presence. Bank Negara Malaysia's decision to open its door to digital banking bodes well for our Southeast Asia expansion strategy. One of our unique value propositions that our clients value much is the breadth and depth of our solutions which becomes a breeze when they can have a single strategic tech partner to integrate a full suite of digital solutions and work alongside their team through phases of their transformation plan. We see a lot of potential in Malaysia and with our new office being set up, we will be able to contribute our deep market knowledge and ready solutions to the local banks and financial institutions in Malaysia.”

She added, “Having served all the major banks and more than half of the insurance companies in China, we have amassed extensive track records in enabling digital transformations for, and accumulated a wealth of bespoke experience in the banking, insurance and ecosystem realms. Since the setting up of our regional headquarters in Singapore in 2018, more than 50 clients across Southeast Asia and other parts of Asia, as well as the UAE and Europe have entrusted us to be their tech expert.” 

Serving the needs of leading financial institutions in Malaysia

OneConnect currently serves a global insurance player and three of the top five local banks in Malaysia It has collaborated with RHB Bank and another top five local bank where it collaborated on the development of two firsts-of-its-kind services that were launched in Malaysia recently. It is also collaborating with CIMB Philippines to enhance digital banking technologies in The Philippines.

OneConnect has partnered with RHB Bank to develop an omnichannel platform that fully digitalises the SME loan experience. The omnichannel platform – comprising the RHB Financing (SME) mobile app for customers, a sales app for the bank's relationship managers and a seamless SME loan management website – utilises OneConnect's artificial intelligence (AI) and eKYC technologies. Launched in August as Malaysia's first AI-powered SME financing mobile app, the app automates and simplifies onboarding process where SMEs only need to submit two scanned documents – MyKad and a bank statement – via their mobile phones to apply for loans. The omnichannel platform lets RHB serve SMEs more efficiently by reducing the back-office processes and operating costs. The bank aims to provide RM500 million in financing facilities to support small businesses in the next year.

OneConnect also partnered with another top five local bank to develop a mobile banking app powered by its eKYC solution, making this the first eKYC solution approved by BNM to launch in Malaysia in October. The app is the first in Malaysia launched by a bank to deliver a truly digital onboarding experience without having to visit any physical branch. Customers can open an account and bank safely anytime and anywhere amidst the ongoing pandemic.

Yao Jing, Head of Strategy and Business Development (Singapore and Malaysia), OneConnect Financial Technology, said, “Our deep market knowledge and ready solutions for Malaysia aptly position us to meet the local needs. We are grateful for the trust and confidence that some of the largest financial institutions in Malaysia have given us and we will continue to deepen the relationships with our valued clients. We see ourselves as a strong tech player in this space, and are dedicated to supporting and enabling the digital banking ecosystem here. We will continue to forge collaborations and work closely with financial institutions and other stakeholders, including Bank Negara Malaysia, and nurture the local tech talents as we walk this journey of a transformational landscape together.”

OneConnect plans to hire local talents to grow a product and engineering team who will provide support for clients in Malaysia and have the opportunities to work on its regional projects.

About OneConnect Financial Technology

OneConnect (NYSE: OCFT) is a leading technology-as-a-service platform for financial institutions. The Company's platform provides cloud-native technology solutions that integrate extensive financial services industry expertise with market-leading technology. The Company's solutions provide technology applications and technology-enabled business services to financial institutions. Together they enable the Company's customers' digital transformations, which help them increase revenue, manage risks, improve efficiency, enhance service quality and reduce costs.

Our technology-as-a-service platform strategically covers multiple verticals in the financial services industry, including banking, insurance and asset management, across the full scope of their businesses – from sales and marketing and risk management to customer services, as well as technology infrastructure such as data management, program development, and cloud services.

Annex: Chinese Glossary

English

Chinese

Tan Bin Ru, CEO (Southeast Asia), OneConnect Financial Technology 

陈敏如, 东南亚首席执行官, 金融壹账通

Yao Jing, Head of Strategy and Business Development (Singapore and Malaysia), OneConnect Financial Technology

姚惊, 战略兼业务拓展总经理 (新加坡与马来西亚地区), 金融壹账通

Dato' Ng Wan Peng, Chief Operating Officer, Malaysia Digital Economy Corporation

拿督黄婉冰, 首席运营官,马来西亚数字经济发展局

 

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SOURCE OneConnect

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Manuela Baroncini joins Swiss Re Corporate Solutions as Global Head Engineering & Construction

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ZURICH, Nov. 27, 2020 /PRNewswire/ — Swiss Re Corporate Solutions appoints Manuela Baroncini as Global Head Engineering & Construction (E&C), effective 1 March 2021. In this role, Ms. Baroncini will be responsible for driving the success of the E&C portfolio, maintaining a profitable book of business and leading a global team of underwriting experts. Based in London and reporting to Martin Hegelbach, Head Property & Specialty, Ms. Baroncini succeeds Guido Benz, who will join Aon at the end of December after 13 years with Swiss Re.

Construction site (PRNewsFoto/Swiss Re Corporate Solutions)

“It is great to welcome someone of Manuela's calibre and technical expertise back to Corporate Solutions. She is a highly energetic, experienced industry leader who understands the needs of our customers. She is also highly engaged with the broking community and truly understands the market,” said Mr. Hegelbach. “Over the past several years, Manuela has amassed a wealth of knowledge and experience by profitably managing large portfolios of business. I look forward to working with her as she leads our next phase of development in this key sector.”

Mr. Hegelbach continued, “We wish Guido great success in his new role. He has been instrumental in building up our E&C book of business and expanding our product offering. We are sad to see him leave but look forward to continuing the relationship as he will remain active in the insurance market.”

Ms. Baroncini brings almost 20 years of construction insurance experience to this role, most recently as Head of Construction UK for a large commercial insurer. In this role, she was responsible for providing construction risk transfer solutions for domestic and multinational risks to help make customers in the UK and around the globe more resilient. She previously worked for Swiss Re Corporate Solutions between 2002 and 2015 in roles of increasing seniority within the E&C team.

Ms. Baroncini holds a Fellowship Post Degree in Material Science from the University of Cambridge and a Master of Science in Mechanical Engineering from the University of Rome Tor Vergata. She is an executive member at the London Engineering Group and a Chartered member of the Italian Institution of Engineers.

The Swiss Re Corporate Solutions E&C team insures a wide range of risks across different sectors including renewable energy, construction, infrastructure, power and utilities, heavy industries and mining.

About Swiss Re Corporate Solutions
Swiss Re Corporate Solutions provides risk transfer solutions to large and mid-sized corporations around the world. Its innovative, highly customised products and standard insurance covers help to make businesses more resilient, while its industry-leading claims service provides additional peace of mind. Swiss Re Corporate Solutions serves clients from offices worldwide and is backed by the financial strength of the Swiss Re Group. Visit corporatesolutions.swissre.com or follow us on linkedin.com/company/swiss-re-corporate-solutions and Twitter @SwissRe_CS.

Logo – https://mma.prnewswire.com/media/1343441/Swiss_Re_Corporate_Solutions_Construction_site.jpg  

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