Good morning and welcome to the Exela Technologies First Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode [Operator Instructions] Please not this event is being recorded. I would now like to turn the conference over to Will Maina, Investor Relations. Please go ahead..

Thank you good morning, everyone, and welcome to Exela Technologies first quarter 2021 conference call. I’m joined today by Ron Cogburn, Exela’s Chief Executive Officer; and Shrikant Sortur, our Chief Financial Officer. Following the prepared remarks made by Ron and Shrikant, we will take your questions.

Today’s conference is being broadcast live via webcast, which is available on the Investor Relations page of Exela’s website at exelatech.com. A replay of this call will be available through May 11, 2021. Information to access the replay is listed in today's press release, which is also available on the Investor Relations page of Exela’s website.

During today’s call, Exela will make certain statements regarding future events and financial performance that maybe characterized as forward-looking under the Private Securities Litigation Reform Act of 1995.

These statements reflect management's current believes, assumptions, and expectations as of today May 4, 2021 and are subject to a number of factors that may cause actual results differ materially from the statements.

We undertake no obligation to update any statements that reflect the events that occur after this call and actual results could differ materially from any forward-looking statements.

For more information please refer to the risk factors discussed in Exela’s most recent periodic report on form 10-K, along with today's press release and Company’s other filings with the SEC. Copies are available on the SEC or the investor relations page of Exela’s website.

During today’s call, you will be referred to certain non-GAAP financial measures. We believe these non-GAAP measures provide additional information on how management views the operating performance of our business. Reconciliations between GAAP and non-GAAP results we discuss on today’s call can be found on the investor relations page of our website.

Please note the presentation that accompanies this conference call is also available on the Investor Relations page or website. With all the mandatory regulatory disclosures out of the way I am pleased to turn the call over to our CEO, Ron Cogburn. Ron, please go ahead..

Good morning, and thanks everyone for joining us on our first quarter 2021 conference call. Today I would like to highlight a few key topics which I hope everyone takes away from this call. To begin with. Exela’s improving key performance metrics, especially our profitability which grew considerably in Q1.

Second, I will address Exela's participation in the digital transformation of our customers by building digital roads over broken processes which drives growth in the B2B and B2C, leaving the existing networks behind. Next we'll talk about new products and markets, which represent exciting growth opportunities for Exela.

These include our digital asset group or DAG, or Exela bills and payments or XBP and the Intelligent Data Processing or IDP solutions, along with the adoption of these solutions in the small and medium business market.

Next we'll talk about our ongoing efforts driving operational leverage and margin improvement, strengthening our balance sheet and financial flexibility and then we will also highlight the stability of our revenue base, growing pipeline, improving customer sentiment all of which gives us increased confidence in our 2021 outlook.

So let's begin today on slide number 4 with an overview of our Q1 results and some recent business highlights. Revenue for the first quarter was in line with our expectations at $300 million variations from Q1 of last year were primarily due to the exit of non-strategic transition revenue, volume impacts from COVID-19 and our non-core assets sales.

Revenue basis stable and diversified from a customer, industry, and geography standpoint. Our backlog is substantial and our pipeline growth remains strong, particularly for our DAG solutions where we're seeing increased demand with new and existing customers.

Through Q1 of 2021, our DAG business represented about 8% of our total revenue including our SMB business. From a profitability perspective, we delivered strong margin improvement in the first quarter as well. Our Q1 gross margin was 22.5% an increase of approximately 370 basis points sequentially and 250 basis points year-over-year.

Q1 adjusted EBITDA margin was 15.5% an increase of 365 basis points from the last quarter and 334 basis points year-over-year. This is noteworthy in this environment. We delivered multiple key new business wins and solution launches in the first quarter as well.

With respect to the new business wins our recent expansion into the small and medium business market showed strong growth in Q1, 2021. SMB customers for our digital mailroom solution grew 117% sequentially in Q1 and our SMB DrySign users increased almost 170%. This is the kind of adoption we were looking for.

Our pipeline continues to grow in this segment and we have plans for further global expansion of this business. As we previously announced in early March, we also delivered our first cloud hosted deployment of PCH Global with a major U.S. insurer.

Under this $90 million 10 year licensing agreement Exela has deployed its PCH Global digital exchange platform to execute the end to end processing of complex healthcare claims for this large customer.

Now regarding the new products and refund solution launches, I was happy to announce the global expansion of our Exchange for Bills and Payments or XBP into the Americas, continental Europe, and the Asia markets.

Now we discussed our XBP platform at length during a recent [common] fireside chat the Legacy billing processes for both payers and receivers today is fraught with inefficient manual processes that are inherently expensive, risky, and they don't give companies the full transparency into their corporate bills and payment process.

XBP enabled biller to send bills to businesses and consumers electronically offering transparency and simple reconciliation. It also allows payers to receive all their bills in one place with the analytics, alerts, and more payment options.

Our XBP solution is garnering accelerating interest across our existing and new customers and I look forward to providing you with updates on future calls. And we're also excited about our recent rollout of our Intelligent Data Processing or IDP platform.

IDP was designed to provide customers with an easy to implement highly scalable, secure, cloud based environment to run their critical business processes.

Our IDP platform leverages artificial intelligence, deep learning architecture, and Exela's vast library of knowledge from customer and industry rules across existing and future processes to generate continuously improve results for our customers. Next is our RPA or Robotic Process Automation. It's another digital solution we're excited to talk about.

We invite you to join us for another fireside chat with DA Davidson on May 20 where we'll go into further detail on the used cases and how these bots are working hard for our customers. Now turning to our operational leverage improvement initiatives. We have a couple of important highlights to mention here.

In the first quarter, we completed 25% of our multiyear plan to reduce our facilities’ footprint, rationalizing our footprint. Also, our initiatives to increase automation in our organization enabled us to continue optimizing our workforce. Our total employees as of March 31, 2021 were 18,400 as compared to 19,000 on December 31 of 2020.

Finally, with respect to our balance sheet, we remained focused on strengthening our financial flexibility and liquidity position. As a reminder, in mid March, we raised $26.8 million in gross proceeds, via an equity offering. Now let's turn to slide number 5.

Now many of you will be familiar with this slide from their last earnings call but I think it's important and it gets to the heart of our strong market position and illustrates the significant addressable market opportunity that we have for our BPM and digital solutions.

With over 30 years of experience we serve 4,000 plus customers globally including 60% of the Fortune 100, Exela's customers across verticals such as banking, insurance, commercial, healthcare and public sector rely on a fully deployed technology stack, the 140 plus delivery centers and over 18,000 employees to execute mission critical business processes.

Now our solutions are integral parts of our customers day-to-day operations and they include liquidity solutions, payment and technology solutions, my favorite human capital management, which we replaced work day, work from anywhere technologies and of course information management and communication.

We believe we've only just scratched the surface in terms of a significant market opportunity with our current customer base. Now let's turn to slide number 6. I'll note that we have deep, valuable, and long tenured relationship with our customers, including many of the world's largest enterprises.

Our largest customers have been with Exela an average of 15 years with low customer concentration and a focus on the industries that have the strongest projected CAGRs like banking, financial services, insurance and healthcare, we're well positioned for growth. Furthermore, with the most of our revenue in the U.S.

and in Europe, we're strategically positioned to benefit from the economic recovery posts COVID-19. Exela's digital foundation in our engineering heritage powers our long tenured customer relationship and this is what enables us to continue to innovate and launch new disruptive solutions that further widen their competitive moat.

Let's turn to slide number 7. You heard me mentioned at the beginning of the call Exela's expansion into the SMB segment. While we have significant whitespace opportunity available with our large enterprise customers, we see strong potential for our leading solutions for small and medium businesses.

SMB today is an untapped market for Exela and we believe it represents a significant future opportunity. Here's some stats and some recent stats that really give us confidence in our offerings. As shown on the left side of the page, we've seen very strong growth in the number of new SMB customers, which I mentioned earlier in the call.

For a digital mailroom, as I mentioned, it's up 117% quarter-over-quarter. DrySign is up 170% quarter-over-quarter driven by an increase in demand for the work from anywhere solutions that we offer.

With the success we've achieved within this space so far, we plan to bring more subscription based business processes to service BPAAS Solutions, software as a service or SaaS to the SMB market across Americas, Europe, and Asia. Now software licenses and subscriptions for our digital platform strengthen our backlog and improve our profitability.

Our enterprise customer contracts tend to be 5 to 10 years with renewals, annual maintenance and support services. They also generate higher gross margins as well. Now our SMB customers are a little different. Their contract tend to be per user per month and our cloud hosted solutions with features and flexibility are ideal for that marketplace.

So in closing, Exela remains well-positioned in today's environment. The global trend towards digital transformation to grow market share, increase productivity and reduce cost your modernization and automation of a business process is generating strong tailwinds for our sector.

Our extensive investment in technology enables us to build long standing trusted relationships with our customers. Our multiple patents and process and new digital solutions deepens and widens our competitive moat as well.

As we execute against our strategy and benefit from the normalization of volumes and customer renewal weights toward pre-COVID levels we anticipate improving performance throughout 2021.

We will continue to execute on our cost efficiency and operational improvement plans to derive future margin expansion while continuing to focus on strengthening our balance sheet and financial flexibility. Based on our Q1 results and the momentum we're seeing in our business, we're reiterating our prior 2021 guidance.

With this, I'll turn the call over to Shrikant Sortur our CFO to run through the numbers in more detail.

Shrikant?.

Thank you, Ron. Good morning, everybody. In my prepared remarks, I'll take you through our consolidated results and segment revenue and discuss guidance for the full year. We are happy to report sequential and year-over-year gross margin and adjusted EBITDA margin growth this quarter.

As we have done in the past, we are reporting both GAAP and non-GAAP numbers. The reconciliation are in our filings and in the appendix of the presentation. Let's start on slide 8 and review our first quarter 2021 results.

Revenue for the first quarter totaled $300.1 million a decrease of 17.9% year-over-year on a reported basis and 19.3% in constant currency. A look at our segment revenue, revenue for our ITPS segment was $231.9 million, a decrease of 18.4% from $284.1 million in the first quarter of 2020.

This decline is primarily driven by the transition revenue and COVID related volumes. Our healthcare solutions segment revenue totaled 51.1 million, a decrease of 20.2% from $64 million in the year ago period. This decline was primarily driven by COVID volumes.

Our legal and loss prevention segment revenue was $17.1 million essentially flat year-over-year. Despite the $65 million year-over-year decline in our Q1 revenue, our gross profit only declined by approximately $5 million, reflecting our ongoing focus on operational improvement and efficiencies.

Our gross profit margin for the first quarter increased 370 basis points sequentially and 250 basis points year-over-year to 22.5% primarily due to better cost and capacity management and the reduction of stranded costs attributable to the transition revenue.

Our gross profits were lower by approximately $5 million due to a non-cash restructuring charge reserve in France for operational improvements. The benefit of our ongoing actions to reduce our cost structure nearly offset the full impact from lower revenue.

Going down the income statement SG&A expenses for Q1 totaled $41.9 million down 16.9% year-over-year and down 8.7% sequentially, representing 14% of sales. We delivered lower year-over-year in sequential SG&A despite the higher professional fees and advisory costs in Q1 of 2021 which we expect will decline in subsequent quarters this year.

Shifting to EBITDA and adjusted EBITDA. In Q1 we delivered EBITDA of $23.5 million compared to $54.6 million in the prior year period. As a reminder, EBITDA for our prior year quarter Q1 of 2020, included a gain of $35.3 million recognized from the sale of SourceHOV Tax, LLC.

Adjusted EBITDA for the first quarter was $46.5 million, up 4.7% from $44.4 million in the prior year period. Our adjusted EBITDA margin for the first quarter was 15.5% up 366 basis points from the prior quarter and 334 basis points from 12.1% in the first quarter of 2020.

Our Q1 margin expansion benefits from cost efficiencies which I just mentioned, including our deployment of work from anywhere solutions, which has helped reduce our real estate facility costs as part of our multiyear facilities plan and cloud deployments which are benefiting our IT infrastructure expenses.

Moving to slide 9, and focusing on our profit and operating metric performance. As I mentioned earlier, our gross profit and EBITDA margins were up substantially in Q1 versus Q4 of 2020 driven by business mix and effective cost management.

Also, importantly, our O&R charges continue to decline in Q1, and we are currently at an approximately $20 million run rate for 2021 compared with $46 million for full year 2020. Adjusted EBITDA less CapEx for Q1, 2021 was $38.8 million representing 12.9% of revenue and 590 basis points improvement from Q4 of 2020.

Let's touch briefly on our balance sheet and liquidity. In March, we raised approximately $26.8 million via an equity offering before deducting placement and other offering expenses.

Our global liquidity for our credit agreement was $62 million as of March 31, 2021 consisting of $22 billion of cash and an additional $20 million of availability under global credit facilities. And an additional $53 million undrawn on our committed securitization facilities in the U.S. Our total net debt as of March 31, 2021 was $1.48 billion.

We believe we are well-positioned to further strengthen the balance sheet as we prepare for the return of COVID volumes and growth in the DAG, SMB space. This past Monday, we filed an S3 to provide the company extra financial flexibility.

Our strategic objective remains; one, achieving higher gross margins by strategically focusing on high quality revenue that includes return of COVID volumes and continued strong growth in DAG, SMB markets. Two, strengthen the balance sheet with the ultimate objective to reduce our cost of capital and enhance financial flexibility on a levered basis.

Turning to a review of our 2021 outlook. As Ron mentioned, we are reaffirming our prior guidance ranges. For the full year 2021, we continue to expect total revenue to be in the range of $1.25 billion to $1.39 billion.

Our current estimates assume the normalization of pre-COVID-19 volumes, renewal rates to return to historical levels pre-COVID-19, and continued momentum in winning new business.

We expect gross margin in 2021 to be between 23% and 25%, reflecting improved operating leverage, resulting from the normalization of volumes to pre-COVID-19 levels, and increased productivity of existing employee base and higher utilization of production infrastructure.

We expect adjusted EBITDA margin to be in the 16% to 17% range, reflecting higher gross margin as well as improved operating leverage resulting from the scaling of revenue with minimal additions to production infrastructure and reduction in professional and legal expenses with the normalization of capital structure.

We expect CapEx levels of approximately 1% of revenue in line with historical level and working capital in line with historical levels and recent trends. Turning to slide 10. I will leave you with three takeaways from today's presentation.

First, our rising performance reflected in the sequential growth and profits and operating metrics with improving operating leverage.

Second, recently launched SMB business showing robust growth in Q1 of 2021 with substantial backlog and growing pipeline, and third, plans to continue to strengthen balance sheet as previously announced are in progress. I'd like to thank you all very much for joining us on the call today. With that operator please open the call for questions..

We will now begin the question and answer session. [Operator Instructions] And our first question will come from Jerry Wang of Carlyle. Please go ahead..

Hey, guys, thanks for the questions. Just kind of few here. Shrikant, I think you mentioned a few quarters ago that in ITPS there is the low margin revenue streams there call it 150 million and most of that if not all of it will be exited at least on the revenue line by the first quarter of ‘21.

Is that still the expectation currently?.

That is correct Jerry. Q1 of 2021 marks almost one full cycle of the transition revenue. We have trended internally as we look at it, we are trended at $147 million of exits. So it's in line with 150 that we had expected..

Okay, great. And then if I look at the three line items, healthcare, ITPS and [rest], if I were to just look at your guidance for the year even looking at the low end of guidance, you should at least see some uptake or at least flattening on the ITPS line.

Is that something you see kind of going forward in the next few quarters at least on ITPS?.

I would say so. Again as you saw on our guidance and our discussions today, there are assumptions built into it. COVID volumes coming back up.

A couple of additional color if you would want healthcare solutions, for example, quarter-over-quarter remain flat which isn't very good because traditionally Q4 tends to be a higher quarter for healthcare solutions. The fact that Q1 of this year was flat with Q4 bodes well for us we expect to see the volumes to continue to pick back up.

LLP we have said that a few different times in the past, project driven so anything could happen. So rest of the growth is going to be picked up from ITPS and the DAG and all of the SMBs that we are focusing on we expect growth to come in that area as well as from payments and a few different business verticals within ITPS..

Great, I appreciate all that color Shrikant. In the quarter, it looks like you're just like moving on to cash flows and working capital sources and uses. It looks like AR and AP kind of moved a little bit outside of where you were in the last quarter or two.

And I think for your guidance, you're expecting it to be call it 1% or so of growth right around that area.

Do you expect that AR/AP to renormalize over the next few quarters?.

Yes. So I'm sure maybe I'm not getting the question right but the 1% is obviously our CapEx estimates right Jerry. So from working capitals perspective, you're thinking about it the right way in the sense we have swings on the audit even quarters. We will continue to expect that obviously, as we convert cash, as you saw between Q4 and Q1.

We had additional margins and cash generation that will help us either to get to a neutral or a cash positive situation from an operational perspective eventually.

okay. Yes. Great. Thanks. And just last one for me. I think you mentioned the [S3] the $500 million mixed shelf that was filed.

Can you provide any additional color there in terms of timing or quantum or use of proceeds?.

Yes. It's really, if you think about it, we already had the [indiscernible] in the past. This was to give us extra flexibility. No specific usage you mark right now, but we're going to be very strategic about it.

From a use of funds perspective it's mainly for general corporate purposes importantly to invest to fuel growth in profitable revenue in the near term.

Also you could -- we could look at it and we have a two or three other areas that we would like to focus on strengthening the balance sheet, reducing our cost of capital, and as I said to improve our liquidity..

And just on the liquidity piece of it, can you say how much liquidity you currently have maybe at the end of April or early May?.

Sure. Right. So what I would like to do is two point answer, one, the liquidity end of April is better than March and from a business perspective every month of the quarter in particular March was definitely much better in terms of volumes and returns compared to Jan and Feb. We have seen a good trend in April.

So our liquidity end of April is better than what it was in March number one. Number two, I think we have been disclosing our liquidity in our chosen case and presentation, so you have a good feel for at various points in time what those were. Lastly, as I said we are looking at hitting all of the parameters profitable growth, margin improvement, etc.

So rather than give you a number of point in time and get locked in, I think we are happy to see the cash conversion or the better margin improvements in the business..

Okay. Thank you. .

yes. Thanks Jerry..

[Operator Instructions] And the next question will come from David Foropoulos of Unum. Please, go ahead..

Hey, thanks for the color guys. One question, primary one is there was any mention in the release to the prepared remarks regarding assets so what we've seen over the last four or five quarters. I just was curious if this was still on your plans? Has there been any change to further divestitures? Thank you..

Hey, good morning, David. Thanks for the question. No change in plans as such but we most certainly want to be very strategic about it. It's depend on the valuations. I think on the last earnings call, I kind of mentioned, the two asset sales that we did were relatively smaller.

The next one that we want to do was probably which one will be it'll be much bigger, potentially bigger and also make the strategic. So depending on the valuation, depending on where we land, we are still looking at it..

Thanks. So you're still in the process here and those parameters I believe $125 million to $250 million of proceeds are still in your side here..

That is correct. Yes. .

Okay. Okay, great. Secondly, the cash burn. I know this is a cash burn quarter and the cadence here. It looks like and I think you cited earlier your AR and maybe some of those items were a little bit you ate a little bit more cash on those. Was any one time I just usually use don't burn this much cash on a quarter.

I'm wondering if I were to look at this and walk through it exactly what would be the outliers this quarter that made it a little bit higher? Was it simply working capital issues with the AR and such? Are there some one timers I'm missing?.

No, actually, I wouldn't even assign it really to one timers. The way I look at it you rightly pointed out, it's working capital swings.

What is probably a little bit more pronounced in Q4 versus Q1 is that Q1 revenue was sequentially down by 14 million, but our AR went up by 10 million which is an indicator of A, the collections in Q4 were pretty robust, pretty good and conversely, in Q1 productions were lighter. So we have that lowered fold. So not too. Yes..

A little bit back in loaded Q1, if things got better as a quarter went on. That makes sense. Okay..

Exactly..

Okay. And then the secondly, you said the cadence of your healthcare volumes is improving.

So we would expect I mean, better margin business that's a tailwind going into the, I guess with more discretionary procedures going on that's definitely a benefit for you guys?.

Exactly. But I want to be cautiously optimistic there. I think the good trend as you look at years past is Q4 healthcare tends to be better than Q1 whereas this quarter-over-quarter it was flat. That's very pleasing for us.

But again I want to be cautiously optimistic given everything going on and hopefully, late Q2 and onwards we will start to see some pre-COVID volumes come back up..

All right, thanks for the color..

No problem. Thank you David..

Our next question comes from Alan Cato of Beach Point Capital. Please go ahead..

All right, thanks for taking my question.

So first on this $66 million year-over-year decline in revenue could you help bridge that between transition/exited revenue and then just COVID impacts like on dollar basis.?.

Yes high level, again, take this as a directional number. But transition impact as we said, 150 run rate, approximately 37 or so a quarter, and I think for Q1 to Q1 that's in the same range 35-36 from a transition revenue impact perspective. COVID impact start of late March.

So 2.5 months of COVID impact when you compare year-over-year, approximately 20 million and then the other 10 million is from the contribution from the asset sales that we did. So in Q1 of last year, we had approximately $10 million from those two assets contributing to the revenue which did not repeat in 2021.

So that's the high level breakout for the $65. .

Got it. Then I guess on the year--over-year declines still being around 20% going from 4Q to 1Q. I guess, like, with some of the reopening going on, I would have thought you'd see some minor sequential improvement.

So what areas I guess within ITPS and healthcare services are still kind of lagging and are still feeling a pretty severe COVID impact?.

Yes. One is, as I said, right already, so you're specifically asking about ITPS, which are looking at it right healthcare and legal sequentially.

Alan, you asked me a sequential right?.

Yes.

Just year-over-year decline going from 4Q to 1Q seems like it's pretty consistent but I thought it would have improved on a easier comp?.

Yes. Okay. Like I said healthcare and legal Q4 to Q1 sequentially relatively flat drilling down into ITPS. Our payments business was actually flat Q4 to Q1.

It isn't the digital assets group where in European region we tend to have one time Q4 benefits from higher software sales, professional service growth sales and equipment sales that obviously doesn't repeat in Q1.

But what is good about this Alan is that not just the revenue decline is never good but what I mean to say is, in Q1, traditionally, every year going from Q4 to Q1 while there's seasonality in Q4, that doesn't get repeated in Q1, we tend to see a lot of forces and pass through in Q1 of every year. This year, it was not that pronounced.

What this means is, while revenue was lower sequentially, it didn't really impact our margins. I think that's the positive takeaway. But long story short, payments within ITPS remains flat. We had some compression in the onsite and our united communication services businesses..

Okay. Got it. Thank you..

Our next question comes from Oliver [indiscernible] of Imperial Capital. Please go ahead..

Hi, guys. I have two questions. First one is around liquidity. You mentioned that you have a little over [$50] million available from the undrawn part of the AR facility.

My question is, is that available to you today?.

Amir, good morning and thanks for the question. It is available to us today subject to conditions. If you have a follow up we can address instead of jumping into a conclusion. So short and sweet answer is it's available to us subject to conditions..

Okay. The other question I have is regarding the healthcare business. When you look at 2020 versus 2021 how should we think about you've given the overall revenue guidance.

Is the healthcare going to perform in line with those sort of year-over-year ranges or should it perform better or I'm just trying to get without getting any specific numbers maybe directionally if you can help us?.

I think again if you look at our base assumptions as long as the pre-COVID or not as long as the pre-COVID volume start to pick up as our renewal rates returned back to normalcy and as we continue to win new business, we certainly see growth in the healthcare space.

What is the unknown right now and that's why we are cautiously optimistic about this is that we don't know how things will pan out in the next two to four months. As inoculation happens, as things start to return back to normalcy there's additional revenue or business to be picked up.

But that's where we need to wait and watch in the near term to see how it will pan out..

Got it. And just broadly EBITDA margins for the healthcare business.

Where are they roughly?.

Yes. From a segment perspective we only look at it at a gross margin levels because of the shared services and corporate cost that is on SG&A and others. So gross margins we expect it to be in line with historical trends and as you saw on our guidance we expect our gross margin pick up from prior years to land at 23% to 25%.

So we will continue to be in the range of growth that we had projected..

Thank you very much. That's all I have. .

Sure. Most welcome..

Our next question comes from Jeff [indiscernible] of JP Morgan. Please go ahead..

Hi, thanks for taking the question. One quick one on slide 8 just about one of the add-backs that you have on your EBITDA line. You have non cash and other of 13.1.

Could you just maybe detail what how much of that is non-cash and/or what exactly those charges were for?.

Yes. Sure. We usually have the details listed in our [indiscernible] for this quarter, we are still not put it out as we filed the queue we'll put it out. But to address your question, Jeff, typically, these non-cash charges that are if there are impairments to [indiscernible] or other intangible assets which is not there in Q1.

Things like non-cash [indiscernible], loss on sale of assets. Those are the non-cash elements. Then the other charges includes potentially employee severance, doc facility, and things like that customer exit costs and things like that.

I will preempt and kind of tell you, you see a higher number there this quarter mainly because I mentioned in the prepared remarks, we took a non-cash charge for our restructuring in France restructuring a couple of facilities that is part of the non-cash back which is driving the higher number in Q1..

Great that's helpful. And in one follow up is if I may totally different question.

Some of the new segments and kind of the newer products that you're going after you list on there on slide 7, but can you tell us like what revenue like DrySign or the HCM stuff or the XBP products are generating? Can you give any color on the size? You gave some growth rates. But it's hard to tell..

Yes. Absolutely. Yes. No problem Jeff. I will provide you that answer and then maybe Ron can add more color from a business perspective. Jeff at this point in time it's almost too early to talk about revenue number because it's not very meaningful right now.

What we are excited about is the number of customers are getting on boarded into some of our products, the DMRs and DrySigns particularly for our digital, our products that we have. That's exciting. And at this point in time, we are more focused on building up these customers.

If you've followed us, if you know us from the past, we have always focused on our top customers, our enterprise customers, which we will continue to do the SMBs provides us a new opportunity to grow revenue, where a lot of these products, it's easy to deploy regular revenue stream and then importantly, we have more products lined up.

So simple answer to your question would be it's not meaningful revenue right now. But it's something that in the pipeline that it'll grow. We hope to grow it in a bigger way. That said, Ron, if you want to give a little bit more color on the products or if you want to add some color, feel free to do so..

Thanks Shrikant. I was feeling left out there. Jeff, what's interesting about these products is that we are always users of our own solutions and services. I've heard some people use the phrase you eat your own dog food. But at the end of the day I have been a user of the DMR solution and DrySign for well over a year.

So I can tell you with confidence that as we roll this out, we did sort of a soft rollout we are thrilled with the adoption rate that we're seeing among that customer sec. So if it's per user per click, per instance it's a much different approach. And for us, that's really exciting because we had not opened up that channel within our business.

So when we look at that and we look at the other things that we can offer on this subscription basis we're very hopeful about where this is going to take us and then in future quarters we can give more detail around the revenue. But right now we're off to a great star..

Thanks for that color. Thank you. .

This concludes our question and answer session. I would now like to turn the conference back over to Ronald Cogburn for closing remarks..

Thanks, operator. As always we're very appreciative for everyone that joined the call today and we really enjoy addressing any questions you have and always you can reach out to us directly if you have questions that we did not answer, you didn't get a chance to ask.

But let me remind you as I did during the prepared remarks, we have got another fireside chat coming up with DA Davidson on May 20 and it's around our RPA solution, Robotic Process Automation, which is part of the overall growth or approach with the digital assets. So please make plans to join us and thanks everyone, and we'll see you next quarter.

This conference is now concluded. Thank you for attending today's presentation and you may now disconnect..