As used herein, the terms “Ebix”, “the Company”, “we”, “us” and “our” refer to
The information contained in this section has been derived from our historical financial statements and should be read together with our historical financial statements and related notes included elsewhere in this document. The discussion below contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties including, but not limited to: demand and acceptance of services offered by us, our ability to achieve and maintain acceptable cost levels, pricing levels and actions by competitors, regulatory matters, general economic conditions, and changing business strategies. Forward-looking statements are subject to a number of factors that could cause actual results to differ materially from our expressed or implied expectations, including, but not limited to our performance in future periods, our ability to generate working capital from operations, the adequacy of our insurance coverage, and the results of litigation or investigations. Our forward-looking statements can be identified by the use of terminology such as "anticipates," "expects," "intends," "believes," "will" or the negative thereof or variations thereon or comparable terminology. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Ebix is a leading international supplier of on-demand infrastructure software exchanges and e-commerce services to the insurance, financial, travel, cash remittance and healthcare industries. In the Insurance sector, the Company's main focus is to develop and deploy globally a wide variety of insurance and reinsurance exchanges on an on-demand basis using SaaS enterprise solutions in the areas of CRM, front-end & back-end systems, and outsourced administrative and risk compliance. The Company's products feature fully customizable and scalable on-demand software designed to streamline the way insurance and financial industry professionals manage distribution, marketing, sales, customer service, and accounting activities. The P&C exchanges operate primarily in
Australia, New Zealandand the U. K. Witha "Phygital" strategy that combines over 650,000 physical distribution outlets in Indiaand many ASEANcountries, to an Omni-channel online digital platform, the Company's EbixCash Financial exchange portfolio of software and services encompasses domestic and international money remittance, foreign exchange ("Forex"), travel, pre-paid gift cards, utility payments, and lending and wealth management in Indiaand other primarily Southeast Asian markets. The Company's Forex Exchange has the leading market share within India'sairport foreign exchange business with operations in 16 international airports, such as Delhi, Mumbai, Hyderabad, Chennaiand Kolkata Internationalairports, all of which combined conducting over $4.8 billionin gross transaction value annually (pre-COVID-19). EbixCash's inward remittance business in Indiaconducts gross annual remittance of approximately $5 billionannually (pre-COVID-19) and is the clear market leader. EbixCash, through its travel portfolio of Via and Mercury, is one of Southeast Asia'sleading travel exchanges, with over 500,000 agents and approximately 18,000 registered corporate clients, combined processing an estimated $2.5 billionin gross merchandise value per annum (pre-COVID-19). Through its various SaaS-based software platforms, Ebix employs thousands of domain-specific technology professionals to provide products, support and consultancy to thousands of customers on six continents. The Company has its global headquarters in Johns Creek, Georgiaand also conducts operating activities in Australia, Brazil, Canada, India, Indonesia, New Zealand, the Philippines, Singapore, Thailand, the United Arab Emirates, and the United Kingdom. Ebix provides application software products for the insurance industry, including carrier systems, agency systems and exchanges, as well as custom software development. Approximately 93% of the Company's revenues are either recurring or repeating (transaction-based) in nature. Rather than license our products in perpetuity, we typically either license them for multiple years with ongoing support revenues or license them on a limited term basis using a subscription hosting or Application Service Provider ("ASP") model. Combined subscription-based and transaction-based revenues of $925 millioncomprised 93% of the Company's total revenues in 2021, as compared to 88% of total revenues in 2020. In 2021, subscription-based revenues increased by approximately $5 millionto $174 million, and as a percentage of the Company's total revenues was 18% in 2021 versus 27% in 2020. The Company's technology vision is to converge processes in a manner such that data can seamlessly flow between entities after an initial data entry has been made. Our customers include many of the top insurance and financial sector companies in the world. The insurance and financial markets continue to focus on initiatives to reduce paper-based processes and facilitate improvements in efficiency, both on the back end of transactions as well as at the consumer-involved front end of transaction 35 -------------------------------------------------------------------------------- Table of Contents processes. This drive for efficiency involves all entities and directly impacts the manner in which insurance and financial products are distributed. Management believes that both the insurance and financial services industries will continue to experience significant change and increased efficiencies through online exchanges as reduced paper-based processes are becoming increasingly the norm across the world insurance and financial markets.
Trends and uncertainties related to the COVID-19 pandemic
December 2019, COVID-19 was reported and has spread globally, including to every state in the U.S.On March 11, 2020, the World Health Organizationdeclared COVID-19 a pandemic, and on March 13, 2020the U.S.government declared a national emergency with respect to COVID-19. In response to the COVID-19 pandemic, many state, local, and foreign governments implemented travel restrictions, quarantines, shelter-in-place orders, and similar government orders and restrictions, in an attempt to control the spread of the disease. Such restrictions or orders, or the perception that such restrictions or orders could be implemented, resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, and the cancellation or postponement of events. Beginning in March 2020, in an effort to protect our employees and comply with applicable government orders, we restricted non-essential employee travel and transitioned our employees to a remote work environment. We have not experienced a material impact from shifting our employees to a remote work environment, which we primarily attribute to the professionalism of our workforce and our extensive use of technology throughout our business. However, COVID-19 could negatively impact the productivity of our workforce if the pandemic requires prolonged remote working conditions. While in 2021 governments have relaxed travel restrictions, quarantines, shelter-in-place orders, and similar restrictions, the ongoing effects of the COVID-19 pandemic on our operational and financial performance will depend on the duration and spread of COVID-19 and its variants. During the fiscal years ended December 31, 2020and December 31, 2021, we experienced a decrease in demand for certain of our solutions and services, particularly those related to the Company's travel, foreign exchange, remittance, e-learning and consulting business areas, after certain government restrictions were implemented. This decreased demand continued throughout 2020 and 2021 in varying degrees for each business area, and even persists through the date of this filing for all of the above mentioned business areas. We expect that demand variability for our products and services will continue as a result of the COVID-19 pandemic, and we cannot predict with any certainty when demand for these solutions/services will return to pre-COVID-19 levels. We continue to monitor developments related to COVID-19 and remain flexible in our response to the challenges presented by the pandemic. Along with the measures mentioned above to protect the health and safety of our employees, we took steps to strengthen our financial position in 2020 to mitigate the adverse impact that COVID-19 has had or may have on our business and operations, including amending our Credit Facility, reducing salaries for certain employees, furloughing employees in the most negatively impacted business areas, eliminating certain employee positions, and eliminating, reducing, or deferring non-essential expenditures. In 2021 we largely returned salaries to pre-COVID-19 levels and, in the case of certain IT professionals, increased wages in reaction to a tightening labor market in India. Additionally, we have ceased our share repurchase program until business conditions improve globally. Our reported results for the year ended December 31, 2021may not be reflective of current market conditions, or of our results for any future periods, which may be negatively impacted by the COVID-19 pandemic to a greater extent than the reported period. The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Annual Report. Refer to Item 1A. "Risk Factors" in this Annual Report on Form 10-K for a complete description of the material risks that the Company currently faces. Key Performance Indicators Management focuses on a variety of key indicators to monitor the Company's operating and financial performance. These performance indicators include measurements of revenue growth, operating income, operating margin, income from continuing operations, diluted earnings per share, and cash provided by operating activities. We monitor these indicators, in conjunction with our corporate governance practices, to ensure efficient management of our business and maintenance of effective controls. The MD&A discusses year-to-year comparisons between 2021 and 2020. Discussions of year-to-year comparisons between 2020 and 2019 are not included in this Form 10-K, but can be found in "Management's Discussion and Analysis of 36 -------------------------------------------------------------------------------- Table of Contents Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020filed with the SECon April 27, 2021.
Key performance indicators for the twelve months ended
Twelve Months Ended December 31, (In thousands except per share data) 2021 2020 2019 Revenue
$ 994,938 $ 625,609 $ 580,615Revenue growth 59 % 8 % 17 % Operating income $ 119,010 $ 125,802 $ 155,673Net income attributable to Ebix, Inc. $ 68,188 $ 92,377 $ 96,720Diluted earnings per share $ 2.22 $ 3.02 $ 3.16Cash provided by operating activities $ 69,471 $ 100,356 $ 60,793RESULTS OF OPERATIONS Year Ended December 31, 2021 2020 2019 (In thousands) Operating revenue: $ 994,938 $ 625,609 $ 580,615Operating expenses: Costs of services provided 705,390 343,262 205,165 Product development 40,015 35,267 45,302 Sales and marketing 14,434 13,835 19,578 General and administrative, net 100,911 87,537 140,429 Amortization and depreciation 15,178 13,738 14,468 Impairment of intangible asset - 6,168 - Total operating expenses 875,928 499,807 424,942 Operating income 119,010 125,802 155,673 Interest expense, net (41,287) (31,411) (41,703) Other non-operating (loss) income (3,766) 153 337 Non-operating expense - litigation settlement - - (21,140) Foreign currency exchange loss, net (434) (387) (2,376) Income before income taxes 73,523 94,157 90,791 Income tax provision (6,584) (5,330) (220) Net income including noncontrolling interest $ 66,939 $ 88,827 $ 90,571Net loss attributable to noncontrolling interest (1,249) $ (3,550) $ (6,149)Net income attributable to Ebix, Inc. $ 68,188$
TWELVE MONTHS ENDED
The Company derives its revenues primarily from subscription and transaction fees pertaining to products or services delivered over our exchanges or from our ASP, fees for business process outsourcing services, and fees for software development projects, including fees for consulting, implementation, training, and project management provided to customers with installed systems, e-governance solutions to governmental agencies in the health and education sectors, as well as foreign exchange, remittance (both inward and outward) and travel services from our financial exchanges.
Ebix’s revenue streams come from three product/service channels. The table below presents the breakdown of our revenues for each of these product/service channels for the years ended.
Table of Contents For the Year Ended December 31, (In thousands) 2021 2020 EbixCash Exchanges 749,774 386,564 Insurance Exchanges 174,193 178,111 Risk Compliance Solutions 70,971 60,934 Totals
$ 994,938 $ 625,609In the table above for the year ending December 31, 2021and 2020 there are $9.6 millionand $13.1 million, respectively, of Insurance Exchange revenues derived in Indiathat are being reported within the EbixCash Exchange channel above. Additionally, for 2021 and 2020, there is approximately $12.5 millionand $1.7 million, respectively, of EbixCash Exchange revenues that are being reported within the Risk Compliance Solutionschannel above due to the nature of the revenues (primarily international consulting and BPO revenues within India). During the twelve months ended December 31, 2021, our total revenue increased $369.3 million, or 59%, to $994.9 millioncompared to $625.6 millionin 2020. The growth in revenues was due primarily to strong demand for the Company's payment solutions business in India(primarily prepaid gift cards). The Company also experienced year-over-year increases in revenues in international insurance exchange revenues and the EbixCash BPO business, offset, in part, by declines in the COVID-19 affected business areas of travel, remittance, e-learning, financial technologies and global product consulting businesses. The payment solutions revenues increased year-over-year by approximately $374 millionyear-over-year to approximately $630 million, or 146% year-over-year growth. The impact from fluctuations of the exchange rates for the foreign currencies in the countries in which we conduct operations also affected reported revenue. During 2021 the change in foreign currency exchange rates increased reported consolidated operating revenue by $3.5 millionand in 2020 decreased reported consolidated operating revenue by $(21.9) million. Thus, on a constant currency basis total revenue for the fiscal year 2021 increased approximately 58% year-over-year.
The specific components of our revenues based on our three main lines of business and changes over the past year are discussed immediately below.
Overall stock market revenue increased
•EbixCash Exchange division revenues increased
$363.2 million, or 94%, due to continued growth in the EbixCash payment solutions (mostly prepaid gift cards), foreign exchange, and bus exchange businesses, offset by continued COVID-19 impacted revenue decreases within our travel, remittance, financial technology and e-learning businesses. The impact from foreign exchange changes within EbixCash had an immaterial impact on reported revenues.
• Revenues from the Insurance Exchange division decreased by
•Risk Compliance Solutions division revenues increased by
$10.0 million, or 16%, primarily due to an increase in revenues within the EbixCash BPO and Australian broker systems businesses, offset in part by declines in U.S.consulting revenues and year-over-year declines in Ebix Latin America revenues, which are heavily consulting oriented and were negatively impacted by COVID-19 in 2021.
International revenues represented 84.4% and 73.4% of the Company’s total revenues for the years ended
Costs of services provided
Costs of services provided, which includes costs associated with product sales, customer support, consulting, implementation, and training services, increased
$362.1 million, or 105%, from $343.3 millionin 2020 to $705.4 millionin 38
2021, and the Company's gross margin decreased to 29.1% in 2021 from 45.1% in 2020. The increase in costs of services provided and the decrease in gross margin from fiscal year 2020 to 2021 is directly related to the increase of over
$370 millionin revenue within the Company's payment solutions business (primarily gift card revenue) in fiscal years 2021 versus 2020. Payment solutions gross margins are significantly lower than other solutions and services the Company provides its customers. In fiscal years 2021 and 2020, the payment solutions gross margins for the Company were approximately 0.5% and 1.1%, respectively. Excluding the payment solutions business, gross margins for the Company in fiscal years 2021 and 2020 were approximately 78% and 76%, respectively. The increase in gross margins, excluding the payment solutions business, in fiscal year 2021 versus 2020 was driven by the revenue mix differences for the Company, with the Company's highest margin solutions/services (e.g. insurance exchange software and services) experiencing less relative negative impact from COVID-19 during 2021 versus other solutions/services (e.g. travel, remittance, financial technology and e-learning businesses). Product Development Expenses The Company's product development efforts are focused on the development of new technologies for insurance carriers, brokers and agents, and the development of new data exchanges for use in domestic and international insurance markets, as well as the Forex and travel sectors. Product development expenses increased $4.7 million, or 13%, from $35.3 millionin 2020 to $40.0 millionin 2021. The increase is due to increased personnel costs experienced in Indiaas a result of both returning reduced salaries to pre-COVID-19 levels and inflationary pressures on wages due to a tight labor market for skilled IT professionals in India. Sales and Marketing Expenses Sales and marketing expenses increased $0.6 million, or 4%, from $13.8 millionin 2020 to $14.4 millionin 2021. This increase is primarily due to a reclassification of certain expenses in 2021 that were recorded to general and administrative expenses in 2020 to sales and marketing expenses in 2021, as well as an increase in advertising and marketing expenses to continue to build our EbixCash brand in Indiaand other Southeast Asian markets. The total of these impacts were an increase in year-over-year expenses of approximately $1.2 million, which was offset in part by total personnel costs decreasing by over $0.4 million.
General and administrative expenses
General and administrative ("G&A") expenses increased
$13.4 million, or 15%, from $87.5 millionin 2020 to $100.9 millionin 2021. In 2020, the Company reduced its acquisition earn-out contingent liability by $3.1 million, which served to reduce overall 2020 G&A expenses. Net of the change in the acquisition earn-out contingent liability, G&A expenses increased by $10.2 millionin 2021 versus 2020. This increase was driven by increased personnel costs, including insurance and other benefits, which increased approximately $11 millionin 2021 as compared to 2020. Additionally, professional fees increased by approximately $2 million, office-related expenses increased by approximately $1 million, and stock-related compensation increased by approximately $0.6 millionin 2021 as compared to 2020. Other items impacting the year-to-year comparison of G&A expenses include a reduction in rent in 2021 versus 2020 of approximately $3.2 millionand a decrease in bad debt expense of approximately $4 millionin fiscal year 2021 as compared to 2020 due to reductions in the $12.1 millioncustomer specific accounts receivable reserve recorded in 2019 in regards to receivables that are due from a public sector entity in Indiaas positive collection trends continued in 2021.
Amortization and depreciation charges
Amortization and depreciation expenses increased
$1.4 million, or 10%, to $15.2 millionin 2021 from $13.7 millionin 2020 primarily due to increased fixed asset depreciation (increased capital expenditures over the past two fiscal years as compared to 2019) and increased amortization in 2021 versus 2020 related to definite-lived intangibles resulting from prior acquisition activity, primarily in India. Interest Income
Interest income decreased
Interest Expense Interest expense increased
$9.8 million, or 31% from $31.6 millionin 2020 to $41.4 millionin 2021, primarily due to increased borrowing costs associated with the Company's primary corporate credit facility. The Company's LIBOR spread 39
increased from 3.50% at the beginning of 2021 to 5.00% in
April 2021as a part of an amendment to the corporate credit facility. The Company also incurred approximately $3.2 millionof expenses associated with the 2021 amendments to the corporate credit facility that have been capitalized and increase interest expense as the costs amortize over the remaining life of the credit facility. Finally, the Company paid a commitment fee to the banks equal to 20 basis points on the total facility size on December 31, 2021, which has been recognized as interest expense in the fourth quarter of 2021. Additionally, the Company's working capital facilities in Indiahad average balances that were essentially flat year-over-year from 2020 to 2021. These working capital facilities generally carry interest rates of between 9% and 10%.
Net foreign exchange loss of
$434 thousandin 2021 which consisted of net losses realized and unrealized upon the settlement of receivables or payables and re-measurement of cash balances denominated in currencies other than the functional currency of the respective operating division recording the instrument. In fiscal year 2020, a net foreign currency exchange loss of $387 thousandwas recorded. Income Taxes The Company recognized income tax expense of $6.6 millionin 2021 compared to $5.3 millionof income tax expense in 2020, representing an increase of $1.3 million. Our effective tax rate increased to 9.0% in 2021, compared with 5.7% in 2020. The increase in the effective tax rate in 2021 is primarily due to the release of valuation allowance on expired domestic loss carryforwards and greater impact of GILTI related items.
Pre-tax income and applicable statutory tax rates in each jurisdiction in which the Company carried on business for the financial year ending
(In thousands) Pre-tax income Statutory tax rate United States (33,311) 21.0 % Canada 242 26.5 % Brazil 2,246 34.0 % Australia 3,304 30.0 % Singapore (2,585) 17.0 % New Zealand 1,318 28.0 % India 68,292 34.6 % Mauritius 4,612 15.0 % United Kingdom 7,116 19.0 % Thailand (33) 20.0 % Dubai 22,322 - % Total 73,523
CASH AND CAPITAL RESOURCES
Our primary sources of liquidity are cash flow generated by our operating activities and available cash and cash equivalents.
We intend to continue to utilize cash flows generated by our ongoing operating activities, in combination with the possible issuance of additional debt or equity, to fund capital expenditures and organic growth initiatives, to make strategic business acquisitions, to retire outstanding indebtedness, and to repurchase shares of our common stock if and as market and operating conditions warrant. The Company's current corporate credit facility, which is a syndicated credit facility with a group of domestic
U.S.banks, will mature on February 5, 2023. Currently, there is $652.3 millionborrowed under this credit facility. The Company is in compliance with its covenants as of December 31, 2021. The pending EbixCash initial public offering of common stock ("EbixCash IPO") could provide material proceeds that the Company can use to reduce its outstanding debt. The Company 40
intends to refinance the credit facility during the fiscal year 2022 with debt and/or equity securities. While there are no assurances that the EbixCash IPO will be executed on terms acceptable to the Company, the Company is likely to evaluate refinancing alternatives in combination with and based on the results of the EbixCash IPO process. We believe that anticipated cash flows provided by our operating activities, together with current cash balances and access to the debt and/or equity capital markets, if required, will be sufficient to meet our projected cash requirements for the next twelve months, although any projections of future cash needs, cash flows, and the general market conditions for debt and equity securities is subject to substantial uncertainty. In the event additional liquidity needs arise, we may raise funds from a combination of sources, including the potential issuance of debt or equity securities. However, there are no assurances that such financing will be available in amounts or on terms acceptable to us, if at all. In addition, the covenants in our Credit Facility could adversely affect our ability to obtain such financing and our ability to make strategic acquisitions, fund investments, repurchase shares of our common stock or engage in other business activities that could be in our interest. We regularly evaluate our liquidity requirements, including the need for additional debt or equity offerings, when considering potential business acquisitions, or the development of new products or services. During fiscal year 2022, the Company intends to utilize its cash and other financing resources to fund organic growth initiatives, strategic business acquisitions, and new product development initiatives and service offerings. Our cash and cash equivalents were
$99.6 millionand $105.0 millionat December 31, 2021and 2020, respectively. The decrease in our short-term liquidity position is primarily due to the following factors: (a) reduced net income in 2021 of $68.2 millionas compared to $92.4 millionin 2020; (b) corporate credit facility term loan repayments in 2021 of $42.6 millionversus $20.9 millionin 2020; (c) capital expenditures and capitalized software costs of approximately $13.2 millionin 2021 as compared to $9.6 millionin 2020; (d) increased accounts receivable and receivables from service providers of approximately $7.5 million; (e) changes in other assets, primarily prepaid expenses, of approximately $17.3 millionin 2021; and (f) offset in part by an increase in accounts payable and accrued expenses of approximately $18.5 million, reduction of marketable securities in 2021 of $8.6 million(source of cash) as compared to an increase in marketable securities in 2020 of $21.0 million(use of cash), and a decrease in the cash used for business acquisitions in 2021 ( $0) as compared to 2020 ( $14.3 million). Our current ratio decreased from 1.89 at December 31, 2020to 1.79 at December 31, 2021, and our working capital position decreased to $161.4 millionat December 31, 2021as compared to $170.5 millionat the end of 2020. We believe that our ability to generate sustainable robust cash flow from operations will enable the Company to continue to meet its debt obligations and to fund its current liabilities from current assets, including available cash balances. The Company holds material cash and cash equivalent balances overseas in foreign jurisdictions. The free flow of cash from certain countries where we hold such balances may be subject to repatriation tax effects and other restrictions. Furthermore, the repatriation of earnings from some of our foreign subsidiaries would result in the application of withholding taxes at source and taxation at the U.S.parent level upon receipt of the repatriation amounts. The approximate cash, cash equivalents, restricted cash, and short-term investments balances held in our domestic U.S.operations and each of our foreign subsidiaries as of February 28, 2022is presented in the table below (figures denominated in thousands): 41
Table of Contents Cash, Restricted Cash and Short-Term Investments India $ 60,170 United States 18,076 Philippines 9,195 Australia 5,606 Canada 4,889 United Arab Emirates 4,813 Latin America 3,766 Singapore 1,646 Europe 1,410 New Zealand 1,408 Indonesia 1,170 Mauritius 13 Total $ 112,162 Business Combinations
The Company seeks to make accretive business acquisitions in combination with organic growth initiatives as part of its overall business growth and expansion strategy. The Company is seeking to acquire businesses complementary to Ebix’s existing products and services.
During the twelve months ending
During the twelve months ending
December 31, 2020, the Company completed two business acquisition as follows: Effective May 4, 2020, Ebix acquired from bankruptcy India-based Trimax, which provides IT and integration services to state-owned transport corporations, operates data centers, and is an IT infrastructure solution provider, for approximately $9.9 millionof upfront consideration. Additionally, Ebix issued preferred shares in Trimax to the selling shareholders that can be sold five years from the closing of the acquisition based on an independent valuation performed by a Big 4 valuation firm. The maximum value of the preferred shares upon sale is approximately $9.9 million. The valuation and purchase price allocation was finalized during the second quarter of 2021. On October 1, 2020the Company acquired a 70% interest in AssureEdge Global Services ("AssureEdge") for a total purchase price of approximately $5.0 million, including net working capital acquired. AssureEdge is a pan- Indiabased BPO company, with a variety of BPO offerings via six contact centers across the country. It serves a number of industries and clients that have cross-selling value for EbixCash services. The valuation and purchase price allocation was finalized during the third quarter of 2021. A significant component of the purchase price consideration for many of the Company's business acquisitions is a potential subsequent cash earn-out payment based on reaching certain specified future revenue targets. The terms for the contingent earn-out payments in most of the Company's business acquisitions typically address the GAAP recognizable revenues achieved by the acquired entity over a one-, two-, and/or three-year period subsequent to the effective date of their acquisition by Ebix. These terms typically establish a minimum threshold revenue target to achieve over the agreed upon period post acquisition to earn the specified cash earn-out payment. The Company applies these terms in its calculation and determination of the fair value of contingent earn-out liabilities for purchased businesses as part of the related valuation and purchase price allocation exercise for the corresponding acquired assets and liabilities. The Company recognizes these potential obligations as contingent liabilities and are reported as such on its consolidated balance sheets. As discussed in more detail in Note 1 to the consolidated financial statements, these contingent consideration liabilities are recorded at fair value on the acquisition date and are re-measured quarterly based on the then assessed fair value and adjusted if necessary. As of December 31, 2021, the total of these contingent liabilities was $2.6 million. As of December 31, 2020, the total of these contingent liabilities was $0.
For the twelve months ended
for the year ended
million, or 31%. The major sources and uses of cash provided by our operating activities during 2021 included net income of
$68.2 million, adjusted for $1.2 millionof net loss attributable to noncontrolling interest, $15.2 millionof depreciation and amortization, $4.3 millionof amortization of right-of-use assets, $5.4 millionof non-cash share-based compensation, $3.3 millionof amortization expense for capitalized software development costs, and approximately $(12.2) millionof asset/liability changes year-over-year within the operating activities section of the consolidated cash flow statement. The decrease in our operating cash flow in 2021 as compared to 2020 is primarily due to a decrease in net income year over year of $24.2 millionand a change in the cash flow impact of deferred taxes year-over-year from $5.1 millionin 2020 versus $(11.1) millionin 2021. Net changes in operating assets and liabilities was $(12.2) millionin 2021 versus $(19.9) millionin 2020. Lastly, the impact on cash flow from operating activities of changes in the allowance for doubtful accounts was $(2.3) millionin 2021 versus $1.7 millionin 2020. For the twelve months ended December 31, 2020, the Company generated $100.4 millionof net cash flow from operating activities compared to $60.8 millionfor the year ended December 31, 2019, representing an increase of $39.6 million, or 65%. The major sources of cash provided by our operating activities during 2020 included net income of $92.4 million, adjusted for $3.6 millionof net loss attributable to a noncontrolling interest, $13.7 millionof depreciation and amortization, $6.1 millionof amortization of right-of-use assets, $6.2 millionrelated to a non-cash intangible impairment loss, $4.8 millionof non-cash share-based compensation, $3.4 millionof amortization expense for capitalized software development costs, $(19.9) millionof working capital requirements, $(6.5) millionof cash used to pay the Miles acquisition earn-out, and $(3.1) millionof non-cash gains recognized when reducing certain earn-out contingent liabilities. The increase in our operating cash flow in 2020 as compared to 2019 is primarily due to increased cash flow from reductions in accounts receivable from trade and service providers as COVID-19 reduced revenues and resulted in comparatively more accounts receivable conversion to cash in 2020 versus 2019. Additionally, in 2019 the acquisition earn-out accrual was reduced by $16.5 million(primarily related to the ItzCash acquisition earn-out accrual) as compared to a reduction of the same accrual in 2020 of $3.1 million(primarily related to the Miles and Zillious acquisitions), both of which served to reduce operating cash flow given the non-cash nature of the gains from earn-out adjustments.
Net cash used for investing activities during the twelve months ended
December 31, 2021totaled $4.6 million, primarily related to $7.5 millionof capital expenditures to support our operations and $5.7 millionused and capitalized in connection with the development of software to be sold/marketed or used internally, offset in part by $8.6 millionprovided by a decrease in marketable securities (specifically bank certificates of deposit). Net cash used for investing activities during the twelve months ended December 31, 2020totaled $44.8 million, primarily related to a $21.0 millionincrease in investment in marketable securities (specifically bank certificates of deposits), $14.3 millionused for acquisitions during the year (net of cash acquired), $5.3 millionof capital expenditures to support our operations, and $4.2 millionused and capitalized in connection with the development of software to be sold/marketed or used internally.
Net cash used by financing activities during the twelve months ended
December 31, 2021was $63.2 million, and primarily consisted of a $10.9 milliondecrease in the year-end balances in our working capital facilities in India, $42.6 millionused to make payments against the Company's outstanding Credit Facility term loan, $22.6 millionof which were scheduled amortization payment, and $9.3 millionused to pay quarterly dividends to the holders of our common stock. Net cash used by financing activities during the twelve months ended December 31, 2020was $42.0 million, and primarily consisted of a $10.9 milliondecrease in the year-end balances in our working capital facilities in India, $20.7 millionused to make scheduled payments against the Company's outstanding Credit Facility term loan, and $9.2 millionused to pay quarterly dividends to the holders of our common stock.
The Company maintains a senior secured syndicated credit facility, dated
August 5, 2014, among Ebix, Inc., as borrower, its subsidiaries party thereto from time to time as guarantors, Regions Bank(as administrative agent and collateral agent) and the lenders party thereto from time to time (as amended from time to time, the "Credit Facility") that provides a $450 millionrevolving line of credit as well as a term loan, which at December 31, 2021had a balance of $212.9 million. The Credit Facility matures in February 2023. 43 -------------------------------------------------------------------------------- Table of Contents On April 9, 2021, The Company entered into Amendment No. 12 to its Credit Facility. Amendment No. 12 provided for, among other things, a waiver of any potential event of default arising under the Credit Facility from the failure to timely deliver the Company's audited consolidated financial statements and related compliance certificate for the year ended December 31, 2020, provided that there is no good faith determination by the requisite lenders under the Credit Facility of a "Material Circumstance" (as defined and further described in Amendment No. 12), which determination (if any) may only be made within a specified period described in Amendment No. 12 and is subject to certain cure rights of the Company. Amendment No. 12 also modified the applicable margin that applies from the date of the amendment forward, modified certain mandatory prepayment provisions, as well as certain other covenants related to restricted payments, investments and certain reporting requirements. On March 31, 2021, Ebix entered into Amendment No. 11 to the Credit Facility. Amendment No. 11 provided, for, among other things, a limited waiver through April 10, 2021, of any potential event of default arising under the Credit Facility from failure to deliver the Company's audited consolidated financial statements and related compliance certificate for the year ended December 31, 2020. Amendment No. 11 also modified certain covenants contained in the Credit Facility, including with respect to certain permitted restricted payments and investments. On May 7, 2020, Ebix entered into Amendment No. 10 to the Credit Facility. Amendment No. 10 provided for, among other things, increased flexibility under financial maintenance covenants, which the Company sought in part due to the unforeseen negative effects of the COVID-19 pandemic. On March 30, 2020, the Company and certain of its subsidiaries entered into a waiver related to the Credit Facility (the "Waiver"). The Waiver provided that so long as the Company's leverage ratio is below 5.0 to 1.0 for the Company's fiscal quarter ending March 31, 2020pursuant to the terms of its compliance certificate required by the Credit Facility, the existing leverage ratio requirement of 3.50 to 1.0 was waived. At December 31, 2021, the outstanding balance on the revolving line of credit under the Credit Facility was $439.4 millionand the facility carried an interest rate of 5.50%. The outstanding balance is included in the long-term liabilities section of the consolidated balance sheets. During 2021, the average and maximum outstanding balances on the revolving line of credit were $439.4 millionand $439.4 million, respectively, and the weighted average interest rate was 5.20%. At December 31, 2021, the outstanding balance on the term loan was $212.9 million, of which $28.2 millionis due within the next twelve months. $42.6 millionof principal payments were made on the term loan during 2021, of which $22.6 millionwere scheduled amortization payments. This term loan also carried an interest rate of 5.50% at December 31, 2021. The current and long-term portions of the term loan are included in the respective current and long-term liabilities sections of the consolidated balance sheets, the amounts of which were $28.2 millionand $184.6 million, respectively, at December 31, 2021. During 2021, the weighted average interest rate on the term loan was 5.12%
Contractual obligations and commercial commitments
The following table summarizes our known contractual debts and lease obligations as of
Payment Due by Period Less Than More than Total 1 Year 1 - 3 Years 3 - 5 Years 5 years (In thousands)
Revolving line of credit
$ 439,402$ - $ 439,402$ - $ - Short and long-term debt* 216,594 31,969 184,625 - - Operating leases 11,363 3,583 5,013 1,688 1,079 Capital leases 517 207 291 19 - Non-Cancellable operating leases 34,402 17,406 16,996 - - Total $ 702,278$
*Excluding amounts related to deferred financing fees
Off-balance sheet transactions
We do not engage in off-balance sheet financing activities.
We do not believe that the rate of inflation has had a material impact on our results of operations. However, inflation could adversely affect our future results of operations.
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