CORRECTING AND REPLACING - EPAM Systems Reports Results for First Quarter 2013
(Thomson Reuters ONE) -
Newtown, PA - May 8, 2013 - In a press release issued earlier today by EPAM
Systems, Inc. (NYSE: EPAM), there was typographical error in the headline of the
press release. The second bullet of the headline should read, "Second quarter
revenues expected to increase 26% to 28% year-over-year." The corrected release
follows:
* First quarter revenues up 32% year-over-year
* Second quarter revenues expected to increase 26% to 28% year-over-year
Newtown, PA - May 8, 2013 - EPAM Systems, Inc. (NYSE: EPAM), a leading provider
of complex software engineering solutions and a leader in Central and Eastern
European IT services delivery, today announced results for the quarter ended
March 31, 2013.
"We continue to execute our strategy which is focused on complex, industry-
driven solutions and high quality software engineering services, both of which
are in strong demand in today's rapidly changing technology environment. Our
solid performance is due in large part to our ability to execute this strategy
while continuing to invest in qualified professionals, productivity tools and
long-term client relationships. As a result of these initiatives, we continue to
gain market share within our existing customer base, expand our client base
across virtually all of our geographies and verticals, and deliver double digit
revenue growth," commented Arkadiy Dobkin, CEO and President of EPAM Systems.
First Quarter 2013 Highlights
* Revenues increased to $124.2 million, up 31.6% year-over-year;
* GAAP income from operations was $15.5 million, an increase of 12.7% compared
to $13.8 million in the first quarter of 2012;
* Non-GAAP income from operations was $18.8 million, an increase of $2.7
million or 16.8% from $16.1 million in the first quarter of 2012;
* Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.27, flat
compared to the year-ago quarter;
* Non-GAAP quarterly diluted EPS was $0.35, up 12.9% from $0.31 in the year-
ago quarter.
EPAM used cash from operations of $11.7 million in the first quarter of 2013.
At March 31, 2013, the Company had cash and cash equivalents of $102.8 million.
Reconciliations of non-GAAP financial measures to operating results and diluted
EPS are included at the end of this release.
Full Year and Second Quarter 2013 Outlook
"The outlook for services remains strong and we expect to see continued growth
momentum in all of our markets. Our growth, whether organic or through
acquisitions, will be driven by our ability to expand our services, add new
vertical markets and provide outstanding technical expertise, especially for new
and emerging technologies," concluded Mr. Dobkin.
Based on current conditions, EPAM reiterates full year guidance of expected
year-over-year revenues growth in the range of 23% to 25%. Non-GAAP net income
growth for 2013 is expected to be in the range of 12% to 15% year-over-year,
with an effective tax rate of approximately 20%.
For the second quarter of 2013, EPAM expects revenues between $131 million and
$133 million, representing a growth rate of 26% to 28% over second quarter 2012
revenues. Second quarter 2013 non-GAAP diluted EPS is expected to be in the
range of $0.38 to $0.40 based on an estimated second quarter 2013 weighted
average of 48.0 million diluted shares.
Conference Call Information
EPAM will hold a conference call to discuss its first quarter 2013 results at
8:00 a.m. Eastern time, on Thursday, May 9, 2013. A live webcast of the call may
be accessed over the Internet from EPAM's Investor Relations website at
http://investors.epam.com . Participants should follow the instructions provided
on the website to download and install the necessary audio applications. The
conference call also is available by dialing 1-877-407-0784 (domestic) or
1-201-689-8560 (international). Participants should ask for the EPAM Systems
first quarter 2013 conference call.
A replay of the live conference call will be available approximately one hour
after the call. The replay will be available on EPAM's website or by dialing
1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the
replay passcode 412950. The telephonic replay will be available until May
16, 2013.
About EPAM Systems
Established in 1993, EPAM Systems, Inc. (NYSE:EPAM) provides software
engineering solutions through its leading Central and Eastern European service
delivery platform. Headquartered in the United States, EPAM employs
approximately 8,700 IT professionals and serves clients worldwide from its
locations in the United States, Canada, UK, Switzerland, Germany, Sweden,
Belarus, Hungary, Russia, Ukraine, Kazakhstan and Poland.
Non-GAAP Financial Measures
EPAM supplements results reported in accordance with principles generally
accepted in the United States, referred to as GAAP, with non-GAAP financial
measures. Management believes these measures help illustrate underlying trends
in EPAM's business and uses the measures to establish budgets and operational
goals, communicated internally and externally, for managing EPAM's business and
evaluating its performance. Management also believes these measures help
investors compare EPAM's operating performance with its results in prior periods
and compare EPAM and similar companies. EPAM anticipates that it will continue
to report both GAAP and certain non-GAAP financial measures in its financial
results, including non-GAAP results that exclude stock-based compensation
expense, write-off and recovery, amortization of purchased intangible assets,
goodwill impairment, legal settlement, foreign exchange gains and losses, and
acquisition-related costs. Additionally, when important to management's
analysis, operating results are compared in "constant currency terms" to exclude
the effect of exchange rate fluctuations by translating the current period's
revenues and expenses into U.S. dollars at the weighted average exchange rates
of the prior period of comparison. Because EPAM's reported non-GAAP financial
measures are not calculated according to GAAP, these measures are not comparable
to GAAP and may not necessarily be comparable to similarly described non-GAAP
measures reported by other companies within EPAM's industry. Consequently,
EPAM's non-GAAP financial measures should not be evaluated in isolation or
supplant comparable GAAP measures, but, rather, should be considered together
with its consolidated financial statements, which are prepared according to
GAAP.
Forward-Looking Statements
This press release includes statements which may constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the accuracy of which are necessarily subject to
risks, uncertainties, and assumptions as to future events that may not prove to
be accurate. Factors that could cause actual results to differ materially from
those expressed or implied include general economic conditions and the factors
discussed in our most recent Annual Report on Form 10-K and other filings with
the Securities and Exchange Commission. EPAM undertakes no obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise, except as may be required under
applicable securities law.
Contact:
EPAM Systems, Inc.
Ilya Cantor, Chief Financial Officer
Phone: +1-267-759-9000 x64588
Fax: +1-267-759-8989
investor_relations(at)epam.com
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
2013 2012
(in thousands,
except
per share data)
Revenues $124,198 $94,383
Operating expenses:
Cost of revenues (exclusive of depreciation and
amortization) 77,937 60,175
Selling, general and administrative expenses 27,083 17,627
Depreciation and amortization expense 3,617 2,211
Other operating expenses, net 2 586
Income from operations 15,536 13,784
Interest and other income, net 630 476
Foreign exchange (loss)/ gain (499) 80
Income before provision for income taxes 15,667 14,340
Provision for income taxes 2,987 2,241
Net income $12,680 $12,099
Net income per share of common stock:
Basic (common) $0.28 $0.30
Diluted (common) $0.27 $0.27
Shares used in calculation of net income per share of common
stock:
Basic (common) 44,812 30,197
Diluted (common) 47,646 33,957
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of As of
March 31, December 31,
2013 2012
(in thousands, except
share
and per share data)
Assets
Current assets
Cash and cash equivalents $102,806 $118,112
Accounts receivable, net of allowance of $2,236 and
$2,203, respectively 75,665 78,906
Unbilled revenues 51,762 33,414
Prepaid and other current assets 15,738 11,835
Employee loans, net of allowance of $0 and $0,
respectively, current 1,018 429
Time deposits 1,562 1,006
Restricted cash, current 24 660
Deferred tax assets, current 6,822 6,593
Total current assets 255,397 250,955
Property and equipment, net 53,265 53,135
Restricted cash, long-term 356 467
Employee loans, net of allowance of $0 and $0,
respectively, long-term 2,232 -
Intangible assets, net 16,030 16,834
Goodwill 22,575 22,698
Deferred tax assets, long-term 6,160 6,093
Other long-term assets 731 632
Total assets $356,746 $350,814
Liabilities
Current liabilities
Accounts payable $9,728 $6,095
Accrued expenses and other liabilities 7,636 19,814
Deferred revenue, current 4,920 6,369
Due to employees 15,129 12,026
Taxes payable 10,282 14,557
Deferred tax liabilities, current 672 491
Total current liabilities 48,367 59,352
Deferred revenue, long-term 621 1,263
Taxes payable, long-term 1,228 1,228
Deferred tax liabilities, long-term 3,071 2,691
Total liabilities 53,287 64,534
Commitments and contingencies
Stockholders' equity
Common stock, $.001 par value; 160,000,000 authorized;
46,180,010 and 45,398,523 shares issued, 45,223,981
and 44,442,494 shares outstanding at March 31, 2013
and December 31, 2012, respectively 45 44
Additional paid-in capital 173,803 166,962
Retained earnings 141,672 128,992
Treasury stock (8,697) (8,697)
Accumulated other comprehensive loss (3,364) (1,021)
Total stockholders' equity 303,459 286,280
Total liabilities and stockholders' equity $356,746 $350,814
EPAM SYSTEMS, INC. AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
(Unaudited)
(In thousands, except per share amounts and percentages)
Three Months Ended
March 31,
----------------------------------
2013 2013 2013
GAAP Adjustments Non-GAAP
--------- ------------- ----------
Cost of revenues (exclusive of
depreciation and amortization) $77,937 ($779) $77,158 (a)
--------- ------------- ----------
Selling, general and administrative
expenses $27,083 ($1,835) $25,248 (b)
--------- ------------- ----------
Income from operations $15,536 $3,313 $18,849 (c)
--------- ------------- ----------
Operating margin 12.5% 2.7% 15.2%
--------- ------------- ----------
Net income $12,680 $3,812 $16,492 (d)
--------- ------------- ----------
Diluted earnings per share $0.27 $0.35 (e)
--------- ----------
Three Months Ended
March 31,
------------------------------------------------
2012 2012 2012
GAAP Adjustments Non-GAAP
------------------ ------------- ---------------
Cost of revenues (exclusive
of depreciation and
amortization) $60,175 ($566) $59,609 (a)
------------------ ------------- ---------------
Selling, general and
administrative expenses
$17,627 ($1,064) $16,563 (b)
------------------ ------------- ---------------
Income from operations
$13,784 $2,354 $16,138 (c)
------------------ ------------- ---------------
Operating margin 14.6% 2.5% 17.1%
------------------ ------------- ---------------
Net income $12,099 $2,274 $14,373 (d)
------------------ ------------- ---------------
Diluted earnings per
share $0.27 $0.31 (e)
------------------ ---------------
Notes:
(a)
Does not include $779 and $566 of stock-based compensation expense reported
within cost of revenues for the three months ended March 31, 2013 and 2012,
respectively.
Three Months Ended
March 31,
-----------------------------
2013 2012
-------- --------------------
(b)
Adjustments to GAAP selling, general and
administrative expenses:
Stock-based compensation expense $1,797 $984
Acquisition-related costs 38 80
-------- --------------------
Total adjustments to GAAP selling, general
and administrative expenses $1,835 $1,064
-------- --------------------
(c)
Adjustments to GAAP income from operations:
Stock-based compensation expense $2,576 $1,550
reported within cost of revenues 779 566
reported within selling, general and
administrative expenses 1,797 984
Amortization of purchased intangible assets
699 140
Acquisition-related costs 38 80
One-time charges - 584
-------- --------------------
Total adjustments to GAAP income from
operations $3,313 $2,354
-------- --------------------
(d)
Adjustment to GAAP net income:
Stock-based compensation expense $2,576 $1,550
reported within cost of revenues 779 566
reported within selling, general and
administrative expenses 1,797 984
Amortization of purchased intangible assets
699 140
Acquisition-related costs 38 80
One-time charges - 584
Foreign exchange loss/ (gain) 499 (80)
-------- --------------------
Total adjustments to GAAP net income $3,812 $2,274
-------- --------------------
(e)
Non-GAAP weighted average diluted common shares outstanding were 47,646
and 45,980 during the three months ended March 31, 2013 and 2012,
respectively.
Non-GAAP diluted earnings per share presents non-GAAP net income divided
by Non-GAAP weighted average diluted common shares outstanding. Non-GAAP
weighted average diluted common shares outstanding assumes (i) the 2.9
million shares EPAM sold in its February 2012 initial public offering were
outstanding as of January 1, 2012, and (ii) the conversion of the
outstanding preferred stock into common stock on an as-converted basis.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: EPAM Systems, Inc. via Thomson Reuters ONE
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