EXELA TECHNOLOGIES, INC. You should read the following discussion and analysis together with our condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q. Among other things, the condensed consolidated financial statements include more detailed information regarding the basis of presentation for the financial data than included in the following discussion. Amounts in thousands ofUnited States dollars.
Restatement
As described in additional detail in the Explanatory Note to our Annual Report on Form 10-K for the year endedDecember 31, 2019 (our "Annual Report"), in our Annual Report we restated our audited consolidated financial statements for the years endedDecember 31, 2018 and 2017 and our unaudited quarterly results for the first three fiscal quarters in the fiscal year endedDecember 31, 2019 and each fiscal quarter in the fiscal year endedDecember 31, 2018 . Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q for the periods affected by the restatement have not been amended. Accordingly, investors should no longer rely upon the Company's previously released financial statements for these periods, and, for these periods, investors should rely solely on the financial statements and other financial data for the relevant periods included in the 2019 Form 10-K and subsequent reports. See Note 20, Unaudited Quarterly Financial Data, of the Notes to the consolidated financial statements in the Annual Report for the impact of these adjustments on each of the quarterly periods in fiscal 2018 and for the first three quarters of fiscal 2019.All amounts in this quarterly report on Form 10-Q affected by the restatement adjustments reflect such amounts as restated.
Forward Looking Statements
Certain statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this quarterly report are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as "may", "should", "would", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential", "seem", "seek", "continue", "future", "will", "expect", "outlook" or other similar words, phrases or expressions. These forward-looking statements include statements regarding our industry, future events, estimated or anticipated future results and benefits, future opportunities forExela , and other statements that are not historical facts. These statements are based on the current expectations ofExela management and are not predictions of actual performance. These statements are subject to a number of risks and uncertainties regardingExela's businesses and actual results may differ materially. The factors that may affect our results include, among others: the impact of political and economic conditions on the demand for our services; the impact of the COVID-19 pandemic; the impact of a data or security breach; the impact of competition or alternatives to our services on our business pricing and other actions by competitors; our ability to address technological development and change in order to keep pace with our industry and the industries of our customers; the impact of terrorism, natural disasters or similar events on our business; the effect of legislative and regulatory actions inthe United States and internationally; the impact of operational failure due to the unavailability or failure of third-party services on which we rely; the effect of intellectual property infringement; and other factors discussed in this quarterly report and our Annual Report under the heading "Risk Factors", and otherwise identified or discussed in this quarterly report. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements, which speak only as of the date of this quarterly report. It is impossible for us to predict new events or circumstances that may arise in the future or how they may affect us. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this quarterly report. We are not including the information provided on any websites that may be referenced herein as part of, or incorporating such information by reference into, this quarterly report. In addition, forward-looking statements provide our expectations, plans or forecasts of future events and views as of the date of this quarterly report. We anticipate that subsequent events and developments may cause ours assessments to change. These forward-looking statements should not be relied upon as representing our assessments as of any date subsequent to the date of this quarterly report. 30
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Overview
Exela Technologies, Inc. ("Exela ," the "Company", "we" or "us") is a global business process automation leader leveraging a global footprint and proprietary technology to help turn the complex into the simple through user friendly software platforms and solutions that enable our customers' digital transformation. We have decades of expertise earned from serving more than 4,000 customers worldwide, including many of the world's largest enterprises and over 60% of the Fortune® 100, in many mission critical environments across multiple industries, including banking, healthcare, insurance and manufacturing. Our technology-enabled solutions allow global organizations to address critical challenges resulting from the massive amounts of data obtained and created through their daily operations. Our solutions address the life cycle of transaction processing and enterprise information management, from enabling payment gateways and data exchanges across multiple systems, to matching inputs against contracts and handling exceptions, to ultimately depositing payments and distributing communications. Through cloud-enabled platforms, built on a configurable stack of automation modules, and over 22,700 employees operating in 23 countries,Exela rapidly deploys integrated technology and operations as an end-to-end digital journey partner. We believe our process expertise, information technology capabilities and operational insights enable our customers' organizations to more efficiently and effectively execute transactions, make decisions, drive revenue and profitability, and communicate critical information to their employees, customers, partners, and vendors. Our solutions are location agnostic, and we believe the combination of our hybrid hosted solutions and global work force in theAmericas , EMEA andAsia offers a meaningful differentiation in the industries we serve and services we provide.
History
We are a former blank check company that completed our initial public offering onJanuary 22, 2015 . InJuly 2017 ,Exela , formerly known asQuinpario Acquisition Corp. 2 ("Quinpario"), completed its acquisition ofSourceHOV Holdings, Inc. ("SourceHOV") andNovitex Holdings, Inc. ("Novitex") pursuant to the business combination agreement datedFebruary 21, 2017 ("Novitex Business Combination"). In conjunction with the completion of the Novitex Business Combination, Quinpario was renamedExela Technologies, Inc. The Novitex Business Combination was accounted for as a reverse merger for whichSourceHOV was determined to be the accounting acquirer. Outstanding shares ofSourceHOV were converted into our Common Stock, presented as a recapitalization, and the net assets of Quinpario were acquired at historical cost, with no goodwill or other intangible assets recorded. The acquisition ofNovitex was treated as a business combination under ASC 805 and was accounted for using the acquisition method. The strategic combination ofSourceHOV andNovitex formedExela , which is one of the largest global providers of information processing solutions based on revenues. OnApril 10, 2018 ,Exela completed the acquisition ofAsterion International Group , a well-established provider of technology driven business process outsourcing, document management and business process automation acrossEurope . The acquisition was strategic to expandingExela's European business. OnNovember 12, 2019 we announced that our Board of Directors had adopted a debt reduction and liquidity improvement initiative ("Initiative"). This new Initiative is part of the Company's strategic priority to position the Company for long-term success and increased stockholder value. As part of the Initiative, onJanuary 10, 2020 , certain subsidiaries of the Company entered into a$160.0 million accounts receivable securitization facility with a five year term and consummated the sale ofSourceHOV Tax, LLC (described below). To fund the debt reduction, the Company is also pursuing the sale of certain non-core assets that are not central to the Company's long-term strategic vision, and any potential action with respect to these operations would be intended to allow the Company to better focus on its core businesses. The Company has retained financial advisors to assist with the sale of select assets. The Company expects to use the net proceeds from the Initiative for the repayment of debt, with a target reduction of$150.0 to$200.0 million .Exela has set a two-year timetable for completion of the Initiative. There can be no assurance that the Initiative or any particular element of the Initiative will be consummated or will achieve its desired result.
As part of the Initiative, on
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Our Segments
Our three reportable segments are Information & Transaction Processing Solutions
("ITPS"), Healthcare Solutions ("HS"), and Legal & Loss Prevention Services
("LLPS"). These segments are comprised of significant strategic business units
that align our TPS and EIM products and services with how we manage our
business, approach our key markets and interact with our customers based on
their respective industries.
ITPS: Our largest segment, ITPS, provides a wide range of solutions and services
designed to aid businesses in information capture, processing, decisioning and
distribution to customers primarily in the financial services, commercial,
public sector and legal industries. Our major customers include many leading
banks, insurance companies, and utilities, as well as hundreds of federal, state
and government entities. Our ITPS offerings enable companies to increase
availability of working capital, reduce turnaround times for application
processes, increase regulatory compliance and enhance consumer engagement.
HS: HS operates and maintains a consulting and outsourcing business specializing
in both the healthcare provider and payer markets. We serve the top healthcare
insurance payers and hundreds of healthcare providers.
LLPS: Our LLPS segment provides a broad and active array of support services in connection with class action, bankruptcy labor, claims adjudication and employment and other legal matters. Our customer base consists of corporate counsel, government attorneys, and law firms.
Revenues
ITPS revenues are primarily generated from a transaction-based pricing model for the various types of volumes processed, licensing and maintenance fees for technology sales, and a mix of fixed management fee and transactional revenue for document logistics and location services. HS revenues are primarily generated from a transaction-based pricing model for the various types of volumes processed for healthcare payers and providers. LLPS revenues are primarily based on time and materials pricing as well as through transactional services priced on a per item basis.
People
We draw on the business and technical expertise of our talented and diverse global workforce to provide our customers with high-quality services. Our business leaders bring a strong diversity of experience in our industry and a track record of successful performance and execution.
As ofMarch 31, 2020 , we had approximately 22,700 employees globally, with 62% located inAmericas and EMEA, and the remainder located primarily inIndia ,the Philippines andChina . Costs associated with our employees represent the most significant expense for our business. We incurred personnel costs of$182.7 million and$178.1 million for the three months endedMarch 31, 2020 and 2019, respectively. The majority of our personnel costs are variable and incurred only while we are providing our services.
Key Performance Indicators
We use a variety of operational and financial measures to assess our performance. Among the measures considered by our management are the following:
? Revenue by segment;
? EBITDA; and
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Table of Contents ? Adjusted EBITDA Revenue by segment We analyze our revenue by comparing actual monthly revenue to internal projections and prior periods across our operating segments in order to assess performance, identify potential areas for improvement, and determine whether our segments are meeting management's expectations.
EBITDA and Adjusted EBITDA
We view EBITDA and Adjusted EBITDA as important indicators of performance of our consolidated operations. We define EBITDA as net income, plus taxes, interest expense, and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus optimization and restructuring charges, including severance and retention expenses; transaction and integration costs; other non-cash charges, including non-cash compensation, (gain) or loss from sale or disposal of assets, and impairment charges; and management fees and expenses. See "-Other Financial Information (Non-GAAP Financial Measures)" for more information and a reconciliation of EBITDA and Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Results of Operations
Three Months EndedMarch 31, 2020 compared to Three Months EndedMarch 31, 2019 : Three Months Ended March 31, 2019 2020 (Restated) Change % Change Revenue: ITPS$ 284,112 $ 325,172 $ (41,060) -12.63% HS 64,049 61,343 2,706 4.41% LLPS 17,290 17,842 (552) -3.09% Total revenue 365,451 404,357 (38,906) -9.62% Cost of revenue (exclusive of depreciation and amortization: ITPS 235,120 259,272 (24,152) -9.32% HS 44,931 40,341 4,590 11.38% LLPS 12,488 10,988 1,500 13.65% Total cost of revenues 292,539 310,601 (18,062) -5.82% Selling, general and administrative expenses (exclusive of depreciation and amortization) 50,374 49,677 697 1.40% Depreciation and amortization 23,185 26,624 (3,439) -12.92% Related party expense 1,551 998 553 55.41% Operating income (loss) (2,198) 16,457 (18,655) -113.36% Interest expense, net 41,588 39,701 1,887 4.75% Sundry expense (income), net 1,082 2,715 (1,633) -60.15% Other expense (income), net (34,657) 1,493 (36,150) -2421.30% Net loss before income taxes (10,211) (27,452) 17,241 -62.80% Income tax expense (2,459) (4,720) 2,261 -47.90% Net loss$ (12,670) $ (32,172) $ 19,502 -60.62% Revenue
For the three months ended
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decline in our ITPS and LLPS segments, which was partially offset by an increase in our HS segment as discussed below. Our ITPS, HS, and LLPS segments constituted 77.7%, 17.5%, and 4.7% of total revenue, respectively, for the three months endedMarch 31, 2020 , compared to 80.0%, 15.2%, and 4.4%, respectively, for the three months endedMarch 31, 2019 . The revenue changes by reporting segment were as follows: ITPS- For the three months endedMarch 31, 2020 , revenue attributable to our ITPS segment decreased by$41.1 million , or 12.6% compared to the same period in the prior year. The majority of this revenue decline is attributable to exiting contracts and statements of work in late 2019 from certain customers with revenue that we believe was unpredictable, non-recurring and were not a strategic fit to Company's long-term success or unlikely to achieve the Company's long-term target margins ("transition revenue"). HS- For the three months endedMarch 31, 2020 , revenue attributable to our HS segment increased compared to the same period in the prior year primarily due to ramp up of new customers and higher volumes from existing customers. LLPS- For the three months endedMarch 31, 2020 , revenue attributable to our LLPS segment decreased marginally compared to the same period in the prior year primarily due to a decline in legal claims administration services.
Cost of Revenue
For the three months endedMarch 31, 2020 , our direct costs decreased by$18.1 million , or 5.8%, compared to the three months endedMarch 31, 2019 . The decrease was primarily driven by our ITPS segment, offset by increase in our HS and LLPS segments. The cost of revenue changes by operating segment was as follows: ITPS-For the three months endedMarch 31, 2020 , costs decreased by$24.2 million , or 9.3%, compared to the three months endedMarch 31, 2019 . The decrease was primarily attributable to a corresponding decline in revenues. However, the three months endedMarch 31, 2020 still had some personnel costs related to the transition revenue that we expect to see gradually removed to further improve the gross margin profile of the business over the remainder of the year.
HS- The increases primarily corresponded with the related revenue increase and continued ramp of projects.
LLPS- Revenue mix (higher pass through revenue) resulted in increased costs in legal claims administration services.
Selling, General and Administrative Expenses
For the three months endedMarch 31, 2020 , SG&A was$50.4 million , relatively flat with the three months endedMarch 31, 2019 at$49.7 million . Higher compensation expenses and professional fees was offset by favorable impacts from lower stock compensation expense, travel and other expenses.
Depreciation & Amortization
Total depreciation and amortization expense was$23.2 million and$26.6 million for the three months endedMarch 31, 2020 and 2019, respectively. The decrease in total depreciation and amortization expense was primarily due to a decrease in amortization expense from intangible assets resulting from business combinations completed in prior periods and a decrease in depreciation expense related to an increase in assets that are fully amortized.
Related Party Expenses
Related party expense was
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Interest Expense
The Company pays interest on its Notes on a semi-annual basis in the first and third quarters of each year; as such, interest expense remained materially consistent with the prior year period.
Sundry Expense (Income)
The decrease of
Other Income
Other income, net was$(34.7) million and$1.5 million for the three months endedMarch 31, 2020 and 2019, respectively. The change was primarily due to higher other (income) of$35.3 million of gain recognized on the sale ofSourceHOV Tax, LLC . Other income also includes an interest rate swap entered into in 2017. The interest rate swap was not designated as a hedge. As such, changes in the fair value of this derivative instrument are recorded directly in earnings. For the three months endedMarch 31, 2020 , the fair value of the interest swap decreased$0.8 million .
Income Tax (Expense) Benefit
We had an income tax expense of$2.5 million for the three months endedMarch 31, 2020 , compared to an income tax expense of$4.7 million for the three months endedMarch 31, 2019 . The change in the income tax expense was primarily attributable to our change in judgment related to the realizability of certain deferred tax assets. The change in the effective tax rate for the three months endedMarch 31, 2020 , resulted from permanent tax adjustments and valuation allowances, including valuation allowances against disallowed interest expense deferred tax assets that are not more-likely-than-not to be realized.
Other Financial Information (Non-GAAP Financial Measures)
We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income, plus taxes, interest expense, and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus optimization and restructuring charges, including severance and retention expenses; transaction and integration costs; other non-cash charges, including non-cash compensation, (gain) or loss from sale or disposal of assets, and impairment charges; and management fees and expenses. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP. Additionally, our credit agreement requires us to comply with certain EBITDA related metrics. Refer to-"Liquidity and Capital Resources-Indebtedness."
Note Regarding Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are not financial measures presented in accordance
with GAAP. We believe that the presentation of these non-GAAP financial measures
will provide useful information to investors in assessing our financial
performance and results of operations as our board of directors and management
use EBITDA and Adjusted EBITDA to assess our financial performance, because it
allows them to compare our operating performance on a consistent basis across
periods by removing the effects of our capital structure (such as varying levels
of interest expense), asset base (such as depreciation and amortization) and
items outside the control of our management team. Net loss is the GAAP measure
most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial
measures should not be considered as alternatives to the most directly
comparable GAAP financial measure. Each of these non-GAAP financial measures has
important limitations as analytical tools because they exclude some but not all
items that affect the most directly comparable GAAP financial measures. These
non-GAAP financial measures are not required to be uniformly applied, are not
audited and should not be considered in isolation or as substitutes for results
prepared in accordance with GAAP. Because EBITDA and Adjusted EBITDA may be
defined differently by other
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companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most directly comparable GAAP measure, for the three months months endedMarch 31, 2020 and 2019. 2019 reconciliation items between EBITDA and Adjusted EBITDA have been adjusted for comparability purposes in the table below. EBITDA and Adjusted EBITDA for the three months endedMarch 31, 2019 remains unchanged. Three Months Ended March 31, 2019 2020 (Restated) Net Loss$ (12,670) $ (32,172) Taxes 2,459 4,720 Interest expense 41,588 39,701 Depreciation and amortization 23,185
26,624
EBITDA 54,562
38,873
Optimization and restructuring expenses (1) 13,140
23,661
Transaction and integration costs (2) 4,374
1,008
Non-cash equity compensation (3) 861
2,798
Other charges including non-cash (4) 3,912
3,055
Loss/(Gain) on sale of assets (5) 157
219
Loss/(Gain) on business disposals (6) (35,316)
-
Loss/(Gain) on derivative instruments (7) 845 1,677 Contract costs (8) 1,852 5,062 Adjusted EBITDA$ 44,387 $ 76,353
Adjustment represents net salary and benefits associated with positions,
current vendor expenses and existing lease contracts that are part of the
1. on-going savings and productivity improvement initiatives in process
transformation, customer transformation and post-merger or acquisition
integration.
2. Represents costs incurred related to transactions for completed or
contemplated transactions during the period.
Represents the non-cash charges related to restricted stock units and options
that vested during the year at Ex-Sigma (the sole equity holder of Ex-Sigma 2)
3. in the case of the
connection with the Novitex Business Combination and the Company under the
2018 Stock Incentive Plan.
Represents fair value adjustments to deferred revenue and deferred rent
4. accounts established as part of purchase accounting and other non-cash
charges. Other charges include severance, retention bonus, facility
consolidation and other transition costs.
5. Represents a loss/(gain) recognized on the disposal of property, plant, and
equipment and other assets.
6. Represents a loss/(gain) recognized on the disposal of noncore-business
assets.
7. Represents the impact of changes in the fair value of an interest rate swap
entered into during the fourth quarter of 2017.
8. Represents costs incurred on new projects, contract start-up costs and project
ramp costs.
Liquidity and Capital Resources
Overview
Our primary source of liquidity is cash generated from operating activities,
supplemented as necessary on a short-term basis by borrowings against our senior
secured revolving credit facility. We believe our current level of cash and
short-term financing capabilities along with future cash flows from operations
are sufficient to meet the needs of the business.
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Our primary source of liquidity is cash generated from operating activities,
supplemented as necessary on a short-term basis by borrowings against our senior
secured revolving credit facility and accounts receivable securitization
facility. We believe our current level of cash and short-term financing
capabilities along with future cash flows from operations are sufficient to meet
the needs of the business. Under ASC Subtopic 205-40, Presentation of Financial
Statements-Going Concern ("ASC 205-40"), the Company has the responsibility to
evaluate whether conditions and/or events raise substantial doubt about its
ability to meet its future financial obligations as they become due within one
year after the date that the financial statements are issued. As previously
reported, Company believes management's plans alleviate the substantial doubt
about the entity's ability to continue as a going concern for at least twelve
months from the date that these condensed consolidated financial statements were
issued.
We currently expect to spend approximately $20.0 to $25.0 million on total
capital expenditures over the next twelve months. We believe that our operating
cash flow and available borrowings under our credit facility will be sufficient
to fund our operations for at least the next twelve months.
On July 13, 2018 , Exela successfully repriced the $343.4 million of term loans
outstanding under our senior secured credit facilities (the "Repricing Term
Loans"). The interest rates applicable to the Repricing Term Loans are 100 basis
points lower than the interest rates applicable to the existing senior secured
term loans that were incurred on July 12, 2017 pursuant to the First Lien Credit
Agreement (the "Credit Agreement").
On July 13, 2018 , the Company borrowed a further $30.0 million pursuant to
incremental term loans under the Credit Agreement. On April 16, 2019 , the
Company borrowed an additional $30.0 million pursuant to incremental term loans
under the Credit Agreement. The proceeds of these incremental term loans
(collectively, the "Incremental Term Loans") were used to replace the cash spent
for acquisitions, pay related fees, expenses and related borrowings and for
general corporate purposes.
The Repricing Term Loans and the Incremental Term Loans bear interest at a rate
per annum consisting of, at the Company's option, either (a) a LIBOR rate
determined by reference to the costs of funds for Eurodollar deposits for the
interest period relevant to such borrowing, adjusted for certain additional
costs, subject to a 1.0% floor, or (b) a base rate determined by reference to
the highest of (i) the federal funds rate plus 0.5%, (ii) the prime rate and
(iii) the one-month adjusted LIBOR plus 1.0%, in each case plus an applicable
margin of 6.5% for LIBOR loans and 5.5% for base rate loans. The Repricing Term
Loans and the Incremental Term Loans will mature on July 12, 2023 .
At March 31, 2020 , cash and cash equivalents totaled $122.6 million and we had
availability of less than $0.1 million under our senior secured revolving credit
facility.
The Company is pursuing a debt reduction and liquidity improvement initiative
that contemplates the pursuit of the sale of certain non-core businesses that
are not central to the Company's long-term strategic vision. The disposition of
those businesses would reduce indebtedness and enhance the Company's ability to
focus on its core businesses. The Company has retained financial advisors to
assist with the sale of select assets. As part of the initiative, the Company
has taken steps to increase its liquidity and its overall financial flexibility.
The Company expects to use the net proceeds from the initiative for the
repayment of debt, with a target reduction of $150.0 to $200.0 million . The
Company has set a two-year timetable for completion of the initiative. There can
be no assurance that the initiative or any particular element of the initiative
will be consummated or will achieve its desired result.
On January 10, 2020 certain subsidiaries of the Company entered into a $160.0
million accounts receivable securitization facility with a five year term (the
"A/R Facility"). The Company used the proceeds of the initial borrowings to
repay outstanding revolving borrowings under the Company's senior credit
facility and to provide additional liquidity and funding for the ongoing
business needs of the Company and its subsidiaries.
On March 16, 2020 , the Company and its indirect wholly owned subsidiaries, Merco
Holdings, LLC and SourceHOV Tax, LLC entered into a Membership Interest Purchase
Agreement with Gainline Source Intermediate Holdings LLC at which time Gainline
Source Intermediate Holdings LLC acquired all of the outstanding membership
interests of SourceHov Tax for $40.0 million , subject to adjustment as set forth
in the purchase agreement of approximately $2.0 million .
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OnMarch 26, 2020 , theDelaware Court of Chancery entered a judgment against one of our subsidiaries in the amount of$57.7 million inclusive of costs and interest arising out of the Appraisal Action, which judgment will continue to accrue interest, until paid, at the legal rate, compounded quarterly. OnMay 7, 2020 , we filed a motion for new trial in relation to share count. OnMay 7, 2020 ,SourceHOV filed a motion for new trial in relation to share count. OnJune 11, 2020 the Court deniedSourceHOV's motion for new trial.SourceHOV now has the right to appeal the judgment to the Supreme Court of the State of Delaware and intends to do so byJuly 1, 2020 . However, at present the judgment has not been stayed, and we expect the petitioners to seek to enforce the judgment. If we are forced to pay the judgment (or bond the judgment pending an appeal, which will likely require cash collateral), such action could have a material adverse effect on our liquidity and/or cause our lenders to take action adverse to us. OnMarch 27, 2020 , the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company is currently evaluating the impact of the CARES Act, and at present expects that the refundable payroll tax credits and deferment of employer side social security payments provisions of the CARES Act will result in a material cash benefit to the Company. The Company will also defer certain payroll, social security and value added taxes in various European jurisdictions, as permitted under the recently enacted COVID-19 relief measures. OnMay 18, 2020 , the Company amended the Credit Agreement to, among other things, extend the time for delivery of its audited financial statements for the year endedDecember 31, 2019 and its financial statements for the quarter endedMarch 31, 2020 . Pursuant to the amendment, the Company also amended the Credit Agreement to, among other things: restrict the borrower and its subsidiaries' ability to designate or invest in unrestricted subsidiaries; incur certain debt; create certain liens; make certain investments; pay certain dividends or other distributions on account of its equity interests; make certain asset sales or other dispositions (or utilize the proceeds of certain asset sales to reinvest in the business); or enter into certain affiliate transactions pursuant to the negative covenants under the Credit Agreement. Further, pursuant to the amendment, the borrower under the Credit Agreement is also required to maintain a minimum Liquidity (as defined in the amendment) of$35.0 million . OnMay 21, 2020 , the Company also amended the A/R Facility to, among other things, extend the time for delivery of its audited financial statements for the year endedDecember 31, 2019 and its financial statements for the quarter endedMarch 31, 2020 . Upon the Company's delivery of the annual and quarterly financial statements described above within the time frames stated within such agreements (which the Company believes it has now satisfied), the Company will, upon delivery of such financial statements, be in compliance with the Credit Agreement, the indenture for its outstanding Notes and the A/R Facility with respect to the financial statement delivery requirements set forth therein. See those certain Current Reports on Form 8-K, filed by the Company onMay 21, 2020 andMay 22, 2020 for additional information on the amendments described above.
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