EPAM Systems Reports Results for Third Quarter 2014
(Thomson Reuters ONE) -
Third Quarter Revenues Up 38% Year-Over-Year and 10% Sequentially
Newtown, PA - November 3, 2014 - 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, 2014.
Third Quarter 2014 Highlights
· Revenues increased to $192.8 million, up 37.5% year-over-year and
10.3% sequentially
· GAAP income from operations was $21.8 million, an increase of $1.6
million or 7.9% from $20.2 million in the third quarter of 2013
· Non-GAAP income from operations was $31.8 million, an increase of $8.0
million or 33.2% from $23.8 million in the third quarter of 2013
· Non-GAAP quarterly diluted EPS was $0.60, up 39.5% from $0.43 in the
third quarter of 2013
· Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.38,
up 11.8% from $0.34 in the third quarter of 2013
EPAM generated cash from operations of $23.1 million in the third quarter of
2014 and $56.2 million on a year-to-date basis. At September 30, 2014, cash and
cash equivalents were $191.2 million.
Reconciliations of non-GAAP financial measures to operating results and diluted
EPS are included at the end of this release.
Corporate Highlights
· EPAM ranked #3 overall and #1 for tech companies on Forbes 2014 List
of America's Best Small Companies
· CEO Arkadiy Dobkin named to Forbes Best Small Companies All Star List
· EPAM won Liberty Global's Best Product & Service Quality award and was
also shortlisted in the top 3 for the Best Innovator category
· EPAM Recognized as a Global R&D and Product Development Services
Leader for Enterprise Software and Consumer Software Markets by Zinnov, a
management consulting firm
· EPAM Recognized among Top 10 Largest Commerce Service Providers by
Leading Independent Research Firm
· EPAM ranked #131 on Software Magazine's 32nd Annual Software 500
· EPAM was included in the shortlist of companies considered for the
implementation of a Consolidated Audit Trail (CAT), a system to be developed in
response to SEC Rule 613, adopted in July 2012
Full Year and Fourth Quarter 2014 Outlook
"EPAM continues its transition into a more strategic, consultative, and
industry-aware partner for our clients. Combined with our traditionally strong
software product engineering capabilities, this allows us to bring a very unique
value to the market." said Arkadiy Dobkin, CEO and President of EPAM. "The
increasing number of public awards and recognitions we continue to receive
together with another solid financial quarter demonstrates the strength of our
offering and the long-term potential of EPAM." concluded Mr. Dobkin.
Based on current conditions, EPAM is increasing full year guidance of expected
revenue growth in the range of $728 million to $730 million. Non-GAAP net income
growth for 2014 is expected to be in the range of 33% to 35% year-over-year,
with an effective tax rate of approximately 19%.
For the fourth quarter of 2014, EPAM expects revenues between $200 million and
$202 million, representing a growth rate of 27% to 28% over fourth quarter 2013
revenues. Fourth quarter 2014 non-GAAP diluted EPS is expected to be in the
range of $0.59 to $0.61 based on an estimated fourth quarter 2014 weighted
average of 50.0 million diluted shares. GAAP diluted EPS is expected to be in
the range of $0.36 to $0.38.
Conference Call Information
EPAM will hold a conference call to discuss its third quarter 2014 results at
8:00 a.m. Eastern time, on Tuesday, November 4, 2014. 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 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 (international) or 1-858-384-5517 (domestic) and entering the
replay passcode 13593426. The telephonic replay will be available until November
19, 2014.
About EPAM Systems
Established in 1993, EPAM Systems, Inc. (NYSE: EPAM) is recognized as a leader
in software product development by independent research agencies. Headquartered
in the United States, EPAM serves clients worldwide utilizing its award-winning
global delivery platform and its locations in 19 countries across North America,
Europe, Asia and Australia. EPAM was ranked #6 in 2013 America's 25 Fastest-
Growing Tech Companies, and #3 in 2014 America's Best Small Companies lists by
Forbes Magazine.
For more information, please visit http://www.epam.com.
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.
Anthony J. Conte, 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 BALANCE SHEETS
(Unaudited)
(US Dollars in thousands, except share and per share data)
As of As of
September December
30, 31,
2014 2013
--------------- ------------
Assets
Current assets
Cash and cash equivalents $ 191,246 $ 169,207
Accounts receivable, net of allowance of $2,385 and
$1,800, respectively 113,940 95,431
Unbilled revenues 70,926 43,108
Prepaid and other current assets 18,188 14,355
Employee loans, net of allowance of $0 and $0,
respectively, current 2,349 1,989
Time deposits 1,061 1,188
Restricted cash, current - 298
Deferred tax assets, current 4,230 5,392
--------------- ------------
Total current assets 401,940 330,968
Property and equipment, net 54,665 53,315
Restricted cash, long-term 208 225
Employee loans, net of allowance of $0 and $0,
respectively, long-term 4,207 4,401
Intangible assets, net 46,280 13,734
Goodwill 39,055 22,268
Deferred tax assets, long-term 14,929 4,557
Other long-term assets 3,747 3,409
--------------- ------------
Total assets $ 565,031 $ 432,877
--------------- ------------
Liabilities
Current liabilities
Accounts payable $ 6,027 $ 2,835
Accrued expenses and other liabilities 31,665 20,175
Deferred revenue, current 2,282 4,543
Due to employees 22,371 12,665
Taxes payable 20,317 14,171
Deferred tax liabilities, current 1,406 275
--------------- ------------
Total current liabilities 84,068 54,664
Other long-term liabilities 31,672 -
Deferred revenue, long-term 113 533
Taxes payable, long-term - 1,228
Deferred tax liabilities, long-term 3,478 351
--------------- ------------
Total liabilities 119,331 56,776
--------------- ------------
Commitments and contingencies
Stockholders' equity
Common stock, $0.001 par value; 160,000,000
authorized; 48,405,957 and 47,569,463 shares issued,
47,691,502 and 46,614,916 shares outstanding at
September 30, 2014 and December 31, 2013,
respectively 48 46
Additional paid-in capital 220,722 195,585
Retained earnings 242,204 190,986
Treasury stock (6,500 ) (8,684 )
Accumulated other comprehensive loss (10,774 ) (1,832 )
--------------- ------------
Total stockholders' equity 445,700 376,101
--------------- ------------
Total liabilities and stockholders' equity $ 565,031 $ 432,877
--------------- ------------
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(US Dollars in thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
2014 2013 2014 2013
------------- ------------- ------------- ------------
Revenues $ 192,764 $ 140,150 $ 527,843 $ 397,532
Operating expenses:
Cost of revenues
(exclusive of depreciation
and amortization) 122,509 88,539 335,065 250,023
Selling, general and
administrative expenses 42,875 27,893 113,905 83,517
Depreciation and
amortization expense 5,510 3,906 14,650 11,377
Other operating expenses,
net 35 (418 ) 2,055 (686 )
------------- ------------- ------------- ------------
Income from operations 21,835 20,230 62,168 53,301
Interest and other income,
net 1,261 846 3,401 2,245
Foreign exchange loss (718 ) (720 ) (3,198 ) (2,088 )
------------- ------------- ------------- ------------
Income before provision
for income taxes 22,378 20,356 62,371 53,458
Provision for income taxes 3,338 3,919 11,153 10,223
------------- ------------- ------------- ------------
Net income $ 19,040 $ 16,437 $ 51,218 $ 43,235
------------- ------------- ------------- ------------
Foreign currency
translation adjustments (8,260 ) 2,975 (8,943 ) (413 )
------------- ------------- ------------- ------------
Comprehensive income $ 10,780 $ 19,412 $ 42,275 $ 42,822
------------- ------------- ------------- ------------
Net income per share:
Basic $ 0.40 $ 0.36 $ 1.09 $ 0.95
Diluted $ 0.38 $ 0.34 $ 1.03 $ 0.90
Shares used in calculation
of net income per share:
Basic 47,315 46,162 47,058 45,492
Diluted 49,829 48,720 49,530 48,120
EPAM SYSTEMS, INC. AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
(in thousands, except percent and per share amounts)
Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014
----------------------------------------- ----------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
------------- ------------- ------------- ------------- ------------- ------------
Cost of revenues
(exclusive of
depreciation and
amortization)(1) $ 122,509 $ (2,463 ) $ 120,046 $ 335,065 $ (6,391 ) $ 328,674
Selling, general
and
administrative
expenses(2) $ 42,875 $ (4,962 ) $ 37,913 $ 113,905 $ (11,013 ) $ 102,892
Income from
operations(3) $ 21,835 $ 9,933 $ 31,768 $ 62,168 $ 24,784 $ 86,952
Operating margin 11.3 % 5.2 % 16.5 % 11.8 % 4.7 % 16.5 %
Net income(4) $ 19,040 $ 10,651 $ 29,691 $ 51,218 $ 27,982 $ 79,200
Diluted earnings
per share(5) $ 0.38 $ 0.22 $ 0.60 $ 1.03 $ 0.57 $ 1.60
Three Months Ended September 30, 2013 Nine Months Ended 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 $ 0.09 $ 0.43 $ 0.90 $ 0.27 $ 1.17
Notes:
(1) Adjustments to GAAP cost of revenues (exclusive of depreciation and
amortization) were comprised of stock-based compensation expense recorded in
the periods presented.
(2) Adjustments to GAAP selling general and administrative expenses:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2014 2013 2014 2013
----------- ----------- ------------ ----------
Stock-based compensation expense $ 4,962 $ 1,867 $ 10,133 $ 6,435
Acquisition-related costs - - 880 48
----------- ----------- ------------ ----------
Total adjustments to GAAP
selling, general and
administrative expenses $ 4,962 $ 1,867 $ 11,013 $ 6,483
----------- ----------- ------------ ----------
(3) Adjustments to GAAP income from operations:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------------
2014 2013 2014 2013
----------- ----------- ------------ -----------
Stock-based compensation expense $ 7,425 $ 3,365 $ 16,524 $ 9,791
reported within cost of revenues 2,463 1,498 6,391 3,356
reported within selling, general
and administrative expenses 4,962 1,867 10,133 6,435
Acquisition-related costs - - 880 48
Amortization of purchased
intangible assets 2,508 723 5,380 2,126
One-time charges - (476 ) 2,000 (807 )
----------- ----------- ------------ -----------
Total adjustments to GAAP income
from operations $ 9,933 $ 3,612 $ 24,784 $ 11,158
----------- ----------- ------------ -----------
(4) Adjustments to GAAP net income:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2014 2013 2014 2013
------------ ----------- ------------ -----------
Stock-based compensation
expense $ 7,425 $ 3,365 $ 16,524 $ 9,791
reported within cost of
revenues 2,463 1,498 6,391 3,356
reported within selling,
general and administrative
expenses 4,962 1,867 10,133 6,435
Acquisition-related costs - - 880 48
Amortization of purchased
intangible assets 2,508 723 5,380 2,126
One-time charges - (476 ) 2,000 (807 )
Foreign exchange loss 718 720 3,198 2,088
------------ ----------- ------------ -----------
Total adjustments to GAAP net
income $ 10,651 $ 4,332 $ 27,982 $ 13,246
------------ ----------- ------------ -----------
(5) There were no adjustments to GAAP average diluted common shares outstanding
during the three and nine months ended September 30, 2014 and 2013.
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire 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 GlobeNewswire
[HUG#1868216]
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Datum: 04.11.2014 - 00:04 Uhr
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