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Ebix 1Q23 results and macro ?3

08:59 10-May-23


The CPI numbers are in line with estimates this morning with both core and non-core readings rising fourth tenths of a percent sequentially.  That continues the not as high as it was, but not low enough, trend, with Shelter continuing to be a big inflationary force.  It's hard to see how the Fed cuts until this changes, and the market is trying to figure out how positive its response to a pause should be.  That is once it gets some clarity on the federal debt wrangling.  Yesterday's meeting only resulted in another meeting for later this week, but both sides seem to be mostly agreeing that there will be no default.  Still, I think a temporary extension followed by possible government shutdown could be in the cards.

Ebix has released its first quarter results:
The CEO has this to say about the company's financial situation:
We are fully aware that non-operating costs like the costs of debt and the advisory costs associated with it, continue to hamper our overall financial results. We are accordingly committed to the aspirational goal of a debt-free Ebix in the year 2023 itself. Towards that, we are looking forward to the EbixCash IPO besides having advanced forward on a number of strategic carve-out alternatives with the stated goal of not having a debt overhang beyond 2023.
I will see if there is any clarification on the during the conference call, which is at 11am, and am unlikely to write again otherwise.  The almost 5% decline in revenue would be concerning no matter what, but the company's principal and interest payments, at $17.5M each are worse.  The combination dwarfs its CapEx of $2.6M, and exceeds GAAP and non-GAAP operating incomes of $30.5 and $34.8M.  EBIX saw an initial high trade at $17.88, but the bid/ask indicates that may not hold.