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Ebix Inc. Message Board

  • stuart60611 stuart60611 Nov 8, 2013 12:47 PM Flag

    Could Be Better/ Could Be Worse, But Some Things In This Qs Earnings Are A Bit Odd

    Overall, I am not disappointed with the earnings report. I greatly feared that things may completely unravel at EBIX because of an inability to sign up new business in light of the investigation. Two things, however, do strike me as odd. First, in the press release the company indicated that it has signed up so many new contracts and one in particular which the company indicates may result in being the largest revenue producing contract for the company. What I simply cannot understand is why the company RARELY announces any of these new contracts. At absolute bare minimum, you would think when you sign such a big new contract with the "largest brokerage" that the company would at least announce it. Such announcements would have really helped support the stock through this difficult time. I just don't get it, and the company not announcing these things, especially such a large new contract, makes me suspect of whether such a new contract even was entered into. Second, the company indicated that it has reached a settlement in one of its lawsuits. Why are we first hearing about this now? The company should have announced the settlement once of the settlement agreement was executed or at minimum once the lawsuit was dismissed with prejudice pursuant to the settlement. Also, would not the company have to file something with the SEC once it settled this lawsuit near or about the time after the settlement was reached instead of first announcing it now? Such a settlement is a material event.

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    • fishart4 Nov 8, 2013 7:10 PM Flag

      STU - Relax. By your own decree this stuff does not matter in the big picture. Winning contracts is what they are supposed to do, so they are just satisfactorily executing their business plan ... until they clear their name of the litigation issues this stuff doesn't matter if you are in it for the long haul.

      So what if they COULD have announced the win a month ago. Does not matter ... does it?

      What this really does is coil the spring up a little bit more for when we DO get the bad NEWS cleared out.

      • 1 Reply to fishart4
      • Well, effective PR matters a whole lot in both the short and long term. The company does not grow much organically and grows primarily through acquisition, which has proven to be the most important component of its business plan. Its share price is its main currency. While the share price remains depressed, EBIX's buying power is greatly reduced. It is clear also from the CC that EBIX's lenders got nervous and demanded that EBIX reduce some debt this quarter, probably due to the triggering of certain covenants tied to EBIX's share price. As a consequence, EBIX missed a golden opportunity to bring a hastened end this short attack while at the same time provide enormous shareholder value by executing on its share buyback where the company could have bought back quite a bit of its stock in single digits and make a very nice ROI and greatly increase EPS but instead had to use the cash to pay down debt. Had the company properly handled its PR this quarter by letting the market know that it was continuing to sign up new and even big new deals, EBIX share price would have been a lot higher and more stable throughout last quarter, and the company thus may have avoided some of the issues with lenders (or at least lessened them). EBIX's inability to conduct competent PR is the primary reason that this short attack got out of control in the first place and that the stock has languished now for over 3 years. EBIX's never ending inability to conduct effective PR continues to exacerbate the short attack and greatly negatively affects the company's business, share price, and ability to effectively execute on its business plan.

    • Not announcing could be because they don't want to open up for class action law suit should the deal fall through..

      Sentiment: Hold

    • jkprice Nov 8, 2013 12:57 PM Flag

      Stu, agree on the material aspect. Could be until the money has changed hands it's not a done deal and therefor not something that can be declared. As far as new contracts, the company you're dealing with may ask for confidentiality. Letting the competition know what you're up to immediately can lose you money.

      • 3 Replies to jkprice
      • I have one more important comment about the issue of confidentiality as a reason for not disclosing new contract signups. Assuming that confidentiality is the reason for not announcing this large brokerage deal (which I doubt), It is clear that at minimum no agreement to keep things confidential prevented EBIX from at the time of signing up this new large customer to at least announce the deal without disclosing the name of the brokerage in the same cryptic fashion that EBIX did in the press release it issued today in connection with earnings. EBIX's failure to do so is just plain stupid, particularly when many feared that revenues would fall this quarter. I just cannot understand why the company cannot seem to understand how important it is when a company is facing so many negative allegations to communicate with the world about its business so as to calm fears. Many of the perception problems EBIX has faced during this short attack were and are avoidable or at least can be greatly mitigated if EBIX had even a clue about how PR is supposed to work. Very frustrating. Had I known about all these new deals, I probably would have bought more shares, and I bet a lot of other people would have also.

      • Ya, maybe confidentiality could prevent the disclosure of new contracts, but I doubt it since this is just providing automation to the brokerage process so I am not sure what would need to be kept confidential, but you make a good point. Also, I am sure that confidentiality was not required in all of the purported new contracts signed up this quarter so why not announce some of those. Also, the dismissal of the lawsuit with prejudice is the final act in the lawsuit so clearly the conclusion of the lawsuit ended on the date of the dismissal. As such, I would think the company would have an obligation to file something with the SEC soon thereafter instead of first announcing it now.

      • I think JK's points are spot on. Also, they may have wanted to save some ammo for the conference call. Given we knew what the potential liability was in the earnout litigation (not much) and that the settlement was de minimis, I can see why they saved that for today.

        What I am more curious about is the $4m accrual for the potential settlement of federal inquiry they alluded to in the press release...pretty specific number for having "no update"???

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