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Ebix Inc. Message Board

  • getintoh20 getintoh20 Jun 21, 2013 7:16 PM Flag

    Ebix (EBIX) Fires Back at Critics with $100M Tongue Lashing

    Ebix, Inc., (Nasdaq: EBIX) fired back today after a Seeking Alpha blog said the stock could be worth nothing, and it fired back with more than just words, announced a $100 million common stock buyback plan.

    "Ebix shares are likely worthless," wrote Seeking Alpha. "Ebix owes at least $80 million to creditors, has a negative net cash position, and potentially owes over $100 million to U.S. taxpayers (in back-taxes, penalties, and interest). This doesn't include additional costs related to the SEC investigation or class-action lawsuits. Given negative organic growth, it's unclear how Ebix will pay its creditors & taxpayers. Governments throughout the world are targeting institutions under suspicion of tax-related malfeasance. Ebix is the worst offender par excellence."

    In response, Ebix said, "The Company believes that recent allegations published in the media and elsewhere are without merit, and that a share repurchase program represents an attractive use of its cash resources. The Board of Directors is confident that the Company is executing on an effective business strategy, which is generating both strong free cash flow and a robust contract pipeline."

    The Company will fund the repurchases through cash on hand and future cash flow from operations. Ebix currently has approximately $35.5 million of cash on hand worldwide. During 2012, the Company generated free cash flow of $65.3 million, excluding the cash used to acquire businesses during the year, said a company press release.

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    • 1. "Ebix owes at least $100 million to U.S. taxpayers (backtaxes, penalties, interest)" Really? Well for the past 3 years, I see Ebix as recording a sum of roughly $200M in pretax income. Income Tax Expense amounted to $10M. Assuming a worst case scenario, of a 15% tax rate, considering EBIX is an international company, the worst case scenario would be them owing the difference of $20M. Far from "at least $100M". How did you compute that in excel or your calculator? By mashing your keyboard?

      2. "Costs related to the SEC Investigation or class-action lawsuits." Seriously? Do you think that a small business, no less a publicly traded company operates without insurance? Professional Liability Insurance, malpractice insurance, umbrella insurance. Have you ever heard of these?

      3. "It's unclear how EBIX will pay its creditors & taxpayers". Maybe with the $90M in current assets? Or perhaps the $70M in cash flow from operations per year? That is assuming that they have to pay anything at all.

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