EPAM Systems Reports Results for Third Quarter 2013
(Thomson Reuters ONE) -
Third quarter revenues up 27% year-over-year and 5% sequentially
Newtown, PA - November 7, 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 September 30, 2013.
"We are pleased to deliver yet another quarter of industry-leading revenue
growth," said Arkadiy Dobkin, CEO and President of EPAM Systems. "During this
time of significant technological change impacting our clients, we are
continuing to prove and enhance our competitive differentiation, in particular
our strong hands-on knowledge of emerging technologies combined with rapidly
improving domain expertise, and the sophistication of our global delivery
platform."
Third Quarter 2013 Highlights
· Revenues increased to $140.2 million, up 27.3% year-over-year and 5.2%
sequentially;
· Non-GAAP income from operations was $23.8 million, an increase of 24.2% from
the third quarter of 2012, rising to 17.0% of revenue;
· GAAP income from operations was $20.2 million compared to $16.7 million in
the third quarter of 2012;
· Non-GAAP quarterly diluted EPS was $0.43, up 16.2% from $0.37 in the year-
ago quarter;
· Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.34
compared to $0.30 in the year-ago quarter.
EPAM generated cash from operations of $15.6 million in the third quarter of
2013. At September 30, 2013, cash and cash equivalents were $123.0 million.
Reconciliations of non-GAAP financial measures to operating results and diluted
EPS are included at the end of this release.
Recognition
· EPAM was named number 2 on the Forbes' list of "America's Best Small
Companies: 20 Fast-Growing Tech Stars" released by Forbes on October 9, 2013.
Forbes' annual list of America's Best Small Public Companies highlights the 100
best-performing public companies with sales below $1 billion ranked according to
their stock performance, return on equity, sales growth, and earnings growth
over the past year and over five years. Based on the ranking, Forbes sub-divided
the listed companies into the fastest growing "tech stars," where EPAM is the
highest ranked Information Technology company. Earlier this year, EPAM was named
to Forbes' list of America's 25 fastest-growing tech companies underscoring the
Company's status as one of the most rapidly developing software engineering and
IT consulting companies in America.
· EPAM was positioned in Zinnov's Global R&D Service Provider Ratings (GSPR)
for 2013 as a Leading Consumer Software Service Provider and a Leading Software/
ISV R&D Service Provider in the Consumer and Enterprise Software categories,
respectively.
· The Everest group recognized EPAM as a "2013 Capital Markets AO Market Star
Performer" (registering a strong year-on-year positive movement both on delivery
capability and market success), for the second year in row. Only five of out of
the 20 assessed providers have received the "star performer" status.
Outlook
"Our business model allows us to maintain stable margins while investing in
critical areas of our business, and at same time delivering superior revenue
growth," continued Mr. Dobkin. "Healthy demand in the third quarter of
2013 resulted in broad-based growth across our verticals, geographies, and
services, driving revenue and EPS outperformance, which allowed us to raise our
guidance early. We are pleased to maintain our recently updated guidance as we
continue to see a very positive demand environment."
Based on current conditions, EPAM reiterates its recently increased full year
guidance of expected year-over-year revenue growth in the range of $542 million
to $545 million. Non-GAAP net income growth for 2013 is expected to be in the
range of 15% to 20% year-over-year, with an effective tax rate of approximately
19%.
For the fourth quarter of 2013, EPAM expects revenues between $144 million and
$147 million, representing a growth rate of 15% to 18% over fourth quarter 2012
revenues. Fourth quarter 2013 non-GAAP diluted EPS is expected to be in the
range of $0.44 to $0.47 based on an estimated fourth quarter 2013 weighted
average of 49.2 million diluted shares.
Conference Call Information
EPAM will hold a conference call to discuss its third quarter 2013 results at
8:00 a.m. Eastern Standard Time, on Friday, November 8, 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 live conference call can be accessed by dialing
1-877-407-0784 (international) or 1-201-689-8560 (domestic).
A telephonic replay of the live conference call will be available approximately
one hour after the call and can be accessed by dialing 1-877-870-5176
(international) or 1-858-384-5517 (domestic). The passcode for the replay is
13572574. The telephonic replay will be available until November 22, 2013.
About EPAM Systems
Established in 1993, EPAM Systems, Inc. (NYSE: EPAM), provides complex
software engineering solutions through its award-winning Central and Eastern
European service delivery platform. Headquartered in the United States, EPAM
employs approximately 9,000 IT professionals and serves clients worldwide from
its locations in the United States, Canada, UK, Switzerland, Germany, Sweden,
Netherlands, Singapore, Belarus, Hungary, Russia, Ukraine, Kazakhstan, and
Poland.
EPAM is ranked #2 on the 2013 Forbes list of America's Best Small Companies: 20
Fast-Growing Tech Stars and is recognized among the leaders in software product
development services by Forrester and Zinnov analysts. The company is also
included in the top 30 in IAOP's "The 2013 Global Outsourcing 100" list.
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. However, 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
Anthony Conte, VP of Finance
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 Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2013 2012 2013 2012
----------- ----------- ----------- -----------
(in thousands, except share and per share data)
Revenues $ 140,150 $ 110,078 $ 397,532 $ 308,261
Operating expenses:
Cost of revenues 88,539
(exclusive of
depreciation and
amortization) 69,099 250,023 193,077
Selling, general and 27,893
administrative
expenses 21,153 83,517 59,491
Depreciation and 3,906
amortization expense 3,040 11,377 7,674
Other operating (418 )
(income)/ expenses,
net 50 (686 ) 669
------------- ------------- ------------- ------------
Income from operations 20,230 16,736 53,301 47,350
Interest and other
income, net 846 486 2,245 1,422
Foreign exchange loss (720 ) (635 ) (2,088 ) (1,949 )
------------- ------------- ------------- ------------
Income before
provision for income
taxes 20,356 16,587 53,458 46,823
Provision for income
taxes 3,919 2,522 10,223 7,338
------------- ------------- ------------- ------------
Net income $ 16,437 $ 14,065 $ 43,235 $ 39,485
------------- ------------- ------------- ------------
Net income per share:
Basic $ 0.36 $ 0.33 $ 0.95 $ 0.93
Diluted $ 0.34 $ 0.30 $ 0.90 $ 0.85
Shares used in
calculation of net
income per share:
Basic 46,162 42,952 45,492 38,990
Diluted 48,720 46,501 48,120 42,729
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of As of
September December
30, 2013 31, 2012
------------------ -----------------
(in thousands, except share
and per share data)
Assets
Current assets
Cash and cash equivalents $ 122,979 $ 118,112
Accounts receivable, net of allowance 78,906
of $2,592 and $2,203, respectively 87,611
Unbilled revenues 64,957 33,414
Prepaid and other current assets 22,234 11,835
Employee loans, net of allowance of 429
$0 and $0, respectively, current 1,848
Time deposits - 1,006
Restricted cash, current 217 660
Deferred tax assets, current 5,350 6,593
-------------------- ------------------
Total current assets 305,196 250,955
Property and equipment, net 54,062 53,135
Restricted cash, long-term 246 467
Employee loans, net of allowance of 4,456 -
$0 and $0, respectively, long-term
Intangible assets, net 14,539 16,834
Goodwill 22,411 22,698
Deferred tax assets, long-term 3,585 6,093
Other long-term assets 969 632
-------------------- ------------------
Total assets $ 405,464 $ 350,814
-------------------- ------------------
Liabilities
Current liabilities
Accounts payable $ 8,195 $ 6,095
Accrued expenses and other 8,866 19,814
liabilities
Deferred revenue, current 2,583 6,369
Due to employees 14,530 12,026
Taxes payable 17,364 14,557
Deferred tax liabilities, current 577 491
-------------------- ------------------
Total current liabilities 52,115 59,352
Deferred revenue, long-term 155 1,263
Taxes payable, long-term 1,228 1,228
Deferred tax liabilities, long-term 354 2,691
-------------------- ------------------
Total liabilities 53,852 64,534
-------------------- ------------------
Commitments and contingencies
Stockholders' equity
Common stock, $0.001 par value;
160,000,000 authorized; 47,329,699
and 45,398,523 shares issued,
46,375,152 and 44,442,494 shares
outstanding at September 30, 2013 and
December 31, 2012, respectively 46 44
Additional paid-in capital 189,457 166,962
Retained earnings 172,227 128,992
Treasury stock (8,684 ) (8,697 )
Accumulated other comprehensive loss (1,434 ) (1,021 )
-------------------- ------------------
Total stockholders' equity 351,612 286,280
-------------------- ------------------
Total liabilities and stockholders'
equity $ 405,464 $ 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 Nine Months Ended
September 30, 2013 September 30, 2013
------------------------------------------ -------------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
------------- -------------- ------------- -------------- -------------- -------------
Cost of revenues
(exclusive of
depreciation and
amortization)(1) $ 88,539 $ (1,498 ) $ 87,041 $ 250,023 $ (3,356 ) $ 246,667
------------- -------------- ------------- -------------- -------------- -------------
Selling, general
and
administrative
expenses(2) $ 27,893 $ (1,867 ) $ 26,026 $ 83,517 $ (6,483 ) $ 77,034
------------- -------------- ------------- -------------- -------------- -------------
Income from
operations(3) $ 20,230 $ 3,612 $ 23,842 $ 53,301 $ 11,158 $ 64,459
------------- -------------- ------------- -------------- -------------- -------------
Operating margin 14.4 % 2.6 % 17.0 % 13.4 % 2.8 % 16.2 %
------------- -------------- ------------- -------------- -------------- -------------
Net income(4) $ 16,437 $ 4,332 $ 20,769 $ 43,235 $ 13,246 $ 56,481
------------- -------------- ------------- -------------- -------------- -------------
Diluted earnings
per share(5) $ 0.34 $ 0.43 $ 0.90 $ 1.17
------------- ------------- -------------- -------------
Three Months Ended Nine Months Ended
September 30, 2012 September 30, 2012
------------------------------------------ -------------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
------------- -------------- ------------- -------------- -------------- -------------
Cost of revenues
(exclusive of
depreciation and
amortization)(1) $ 69,099 $ (1,036 ) $ 68,063 $ 193,077 $ (2,486 ) $ 190,591
------------- -------------- ------------- -------------- -------------- -------------
Selling, general
and
administrative
expenses(2) $ 21,153 $ (997 ) $ 20,156 $ 59,491 $ (3,257 ) $ 56,234
------------- -------------- ------------- -------------- -------------- -------------
Income from
operations(3) $ 16,736 $ 2,464 $ 19,200 $ 47,350 $ 7,038 $ 54,388
------------- -------------- ------------- -------------- -------------- -------------
Operating margin 15.2 % 2.2 % 17.4 % 15.4 % 2.2 % 17.6 %
------------- -------------- ------------- -------------- -------------- -------------
Net income(4) $ 14,065 $ 3,099 $ 17,164 $ 39,485 $ 8,987 $ 48,472
------------- -------------- ------------- -------------- -------------- -------------
Diluted earnings
per share(5) $ 0.30 $ 0.37 $ 0.85 $ 1.06
------------- ------------- -------------- -------------
Notes:
(1) Adjustments to GAAP cost of revenues (exclusive of depreciation and
amortization) include $1,498 and $1,036 of stock-based compensation expense
reported within cost of revenues during the three months ended September
30, 2013 and 2012, respectively, and $3,356 and $2,486 of stock-based expense
during the nine months ended September, 2013 and 2012, respectively.
(2) Adjustments to GAAP selling general and administrative expenses:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ---------------------
2013 2012 2013 2012
---------- ------------- ---------- ----------
Stock-based compensation
expense $ 1,867 $ 1,010 $ 6,435 $ 2,883
Acquisition-related costs - (13 ) 48 374
------------------------ ---------------------
Total adjustments to GAAP
selling, general and
administrative expenses $ 1,867 $ 997 $ 6,483 $ 3,257
------------------------ ---------------------
(3) Adjustments to GAAP income from operations:
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------
2013 2012 2013 2012
-----------------------------------------------------
Stock-based compensation
expense $ 3,365 $ 2,046 $ 9,791 $ 5,369
reported within cost of
revenues 1,498 1,036 3,356 2,486
reported within selling,
general and
administrative expenses 1,867 1,010 6,435 2,883
Amortization of purchased
intangible assets 723 431 2,126 711
Acquisition-related costs - (13 ) 48 374
One-time charges (476 ) - (807 ) 584
------------ ------------ ------------- -----------
Total adjustments to GAAP
income from operations $ 3,612 $ 2,464 $ 11,158 $ 7,038
------------ ------------ ------------- -----------
(4) Adjustments to GAAP net income:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2013 2012 2013 2012
------------ ------------ ------------- -----------
Stock-based compensation
expense $ 3,365 $ 2,046 $ 9,791 $ 5,369
reported within cost of
revenues 1,498 1,036 3,356 2,486
reported within selling,
general and
administrative expenses 1,867 1,010 6,435 2,883
Amortization of purchased
intangible assets 723 431 2,126 711
Acquisition-related costs - (13 ) 48 374
One-time charges (476 ) - (807 ) 584
Foreign exchange loss 720 635 2,088 1,949
------------ ------------ ------------- -----------
Total adjustments to GAAP
net income $ 4,332 $ 3,099 $ 13,246 $ 8,987
------------ ------------ ------------- -----------
(5) Non-GAAP weighted average diluted common shares outstanding were 48,720
and 46,501 during the three months ended September 30, 2013 and 2012,
respectively, and 48,120 and 45,803 during the nine months ended September
30, 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
[HUG#1741713]
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Datum: 08.11.2013 - 01:03 Uhr
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News-ID 314287
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