EPAM Systems, Inc. Reports Results for Fourth Quarter and Full Year 2014
(Thomson Reuters ONE) -
Fourth Quarter revenue increased 28.3% year-over-year and 4.9% sequentially
Annual revenues of $730.0 million, up 31.5% year-over-year
Non-GAAP net income grew more than 32.7% for the fourth quarter year-over-year
and 38.0% for the full year
Newtown, PA - February 25, 2015 - EPAM Systems, Inc. (NYSE: EPAM), a leading
global provider of complex software engineering solutions and a leader in
delivery capacity distributed across Central and Eastern Europe, today announced
results for its fourth quarter and year ended December 31, 2014.
Fourth Quarter 2014 Highlights
· Revenues increased to a record $202.2 million, up 28.3% year-over-
year, and 4.9% sequentially;
· In constant currency, revenue was up 36.7% year over year and 9%
sequentially;
· GAAP income from operations was $24.0 million, an increase of 3.5%
compared to $23.2 million in the fourth quarter of 2013;
· Non-GAAP income from operations was $36.2 million, an increase of
$8.8 million, or 32.2%, from $27.4 million in the fourth quarter of 2013;
· Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.37,
down from $0.38 in the year-ago quarter;
· Non-GAAP quarterly diluted EPS was $0.62, up 29.2% from $0.48 in the
year-ago quarter.
EPAM generated cash from operations of $49.1 million in the fourth quarter of
2014, an increase of $2.7 million generated over the fourth quarter of 2013.
Reconciliations of non-GAAP financial measures to GAAP operating results and
diluted EPS are included at the end of this press release.
"2014 was another successful year of transforming EPAM from being a pure
software engineering outsourcing firm into a solution provider with well-
balanced capabilities ranging from digital strategy to managed services, and
doing that while maintaining our traditionally strong focus on the engineering
quality of our deliverables. We are glad to have achieved this transformation
despite a number of challenges we faced in 2014 - some expected as we transition
into a more mature company and some very much outside of our control," said
Arkadiy Dobkin, CEO and President of EPAM. "We are confident that we are on the
correct path, as demonstrated by our over 30% revenue growth and by EPAM
reaching the $200 million quarterly revenue mark for the first time in our
history."
Full Year 2014 Highlights
· Revenues increased 31.5% to a record $730.0 million, up from $555.1
million in 2013;
· In constant currency, revenue was up 34.2% year over year;
· GAAP income from operations for 2014 was $86.2 million, an increase
of 12.7% over 2013;
· Non-GAAP income from operations was $123.1 million, an increase of
34.1% compared to $91.8 million in 2013;
· Diluted EPS on a GAAP basis was $1.40, compared to $1.28 in the
previous year;
· Non-GAAP diluted EPS was $2.22, compared to $1.66 in 2013.
For the full year 2014, EPAM generated operating cash flow of $105.2 million. As
of December 31, 2014 EPAM had cash and cash equivalents of $220.5 million.
Corporate Highlights
· EPAM ranked #3 on Forbes' 2014 List of America's Best Small
Companies, scores #1 Among Technology Companies
· EPAM won Best Agile Category at the 2014 European Software Testing
Awards
· EPAM won Most Transformative Branch Experience Award in the Citi
Mobile Challenge
"As we turn our attention to 2015, we face another year of challenges, and feel
that EPAM is very well positioned to continue its transformation to support its
growth and expansion," continued Mr. Dobkin.
Full Year and First Quarter 2015 Outlook
Based on current conditions, EPAM expects year-over-year revenue growth to be
21%-23%. Non-GAAP net income growth for 2015 is expected to be in the range of
20% to 22% year-over-year, with an effective tax rate of approximately 20%. The
full year weighted average share count is expected to be just approximately 51
million diluted shares outstanding.
For the first quarter of 2015, EPAM expects revenues between $196 million and
$198 million, representing a growth rate of 22% to 23% over first quarter 2014
revenues. First quarter 2015 non-GAAP diluted EPS is expected to be in the range
of $0.54 to $0.55 based on an estimated first quarter 2015 weighted average of
50.7 million diluted shares. GAAP diluted EPS is expected to be in the range of
$0.34 to $0.35.
Conference Call Information
EPAM will host a conference call to discuss results on Thursday, February
26, 2015 at 8:00 a.m. Eastern Time. The live conference call can be accessed by
dialing 1-877-407-0784 (international) or 1-201-689-8560 (domestic). A
telephonic replay will also 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 13600522. The telephonic replay will
be available until March 12, 2015. Interested investors and other parties may
also listen to a webcast of the conference call by logging onto the Investor
Relations section of the Company's website at http://investors.epam.com.
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 United States generally
accepted accounting principles, 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. 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.
Because EPAM's reported non-GAAP financial measures are not calculated according
to GAAP, these measures are not comparable to GAAP and may not 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 the information in EPAM's 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
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(US Dollars in thousands, except share and per share data)
Three Months Ended Year Ended
December 31, December 31,
--------------------------- --------------------------
2014 2013 2014 2013
------------- ------------- ------------- ------------
Revenues $ 202,184 $ 157,585 $ 730,027 $ 555,117
Operating expenses:
Cost of revenues
(exclusive of
depreciation and
amortization) 121,465 97,627 456,530 347,650
Selling, general and
administrative expenses 49,761 32,980 163,666 116,497
Depreciation and
amortization expense 2,833 3,743 17,483 15,120
Goodwill impairment loss 2,241 - 2,241 -
Other operating
expenses/(income), net 1,869 43 3,924 (643 )
------------- ------------- ------------- ------------
Income from operations 24,015 23,192 86,183 76,493
Interest and other
income, net 1,368 832 4,769 3,077
Change in fair value of
contingent consideration (1,924 ) - (1,924 ) -
Foreign exchange
income/(loss) 1,123 (712 ) (2,075 ) (2,800 )
------------- ------------- ------------- ------------
Income before provision
for income taxes 24,582 23,312 86,953 76,770
Provision for income
taxes 6,159 4,553 17,312 14,776
------------- ------------- ------------- ------------
Net income $ 18,423 $ 18,759 $ 69,641 $ 61,994
------------- ------------- ------------- ------------
Foreign currency
translation adjustments (11,308 ) (398 ) (20,251 ) (811 )
------------- ------------- ------------- ------------
Comprehensive income $ 7,115 $ 18,361 $ 49,390 $ 61,183
------------- ------------- ------------- ------------
Net income per share:
Basic $ 0.39 $ 0.40 $ 1.48 $ 1.35
Diluted $ 0.37 $ 0.38 $ 1.40 $ 1.28
Shares used in
calculation of net
income per share:
Basic 47,620 46,532 47,189 45,754
Diluted 50,339 49,066 49,723 48,358
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(US Dollars in thousands, except share and per share data)
As of December As of December
31, 2014 31, 2013
--------------------- --------------------
Assets
Current assets
Cash and cash equivalents $ 220,534 $ 169,207
Accounts receivable, net of
allowance of $2,181 and $1,800,
respectively
124,483 95,431
Unbilled revenues 55,851 43,108
Prepaid and other current assets 9,289 14,355
Employee loans, net of allowance of
$0 and $0, respectively, current 2,434 1,989
Time deposits - 1,188
Restricted cash, current - 298
Deferred tax assets, current 2,496 5,392
--------------------- --------------------
Total current assets 415,087 330,968
Property and equipment, net 55,134 53,315
Restricted cash, long-term 156 225
Employee loans, net of allowance of
$0 and $0, respectively, long-term 4,081 4,401
Intangible assets, net 47,689 13,734
Goodwill 57,417 22,268
Deferred tax assets, long-term 11,094 4,557
Other long-term assets 3,368 3,409
--------------------- --------------------
Total assets $ 594,026 $ 432,877
--------------------- --------------------
Liabilities
Current liabilities
Accounts payable $ 4,641 $ 2,835
Accrued expenses and other
liabilities 32,203 20,175
Deferred revenue, current 3,220 4,543
Due to employees 24,518 12,665
Taxes payable 24,704 14,171
Contingent consideration, current 35,524 -
Deferred tax liabilities, current 603 275
--------------------- --------------------
Total current liabilities 125,413 54,664
Deferred revenue, long-term - 533
Taxes payable, long-term - 1,228
Deferred tax liabilities, long-term 4,563 351
--------------------- --------------------
Total liabilities 129,976 56,776
--------------------- --------------------
Commitments and contingencies
Stockholders' equity
Common stock, $0.001 par value;
160,000,000 authorized; 48,748,298
and 47,569,463 shares issued,
48,303,811 and 46,614,916 shares
outstanding at December 31, 2014 and
December 31, 2013, respectively 48 46
Additional paid-in capital 229,501 195,585
Retained earnings 260,598 190,986
Treasury stock (4,043 ) (8,684 )
Accumulated other comprehensive loss (22,054 ) (1,832 )
--------------------- --------------------
Total stockholders' equity 464,050 376,101
--------------------- --------------------
Total liabilities and stockholders'
equity $ 594,026 $ 432,877
--------------------- --------------------
EPAM SYSTEMS, INC. AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
(in thousands, except percent and per share amounts)
(Unaudited)
Three months ended December 31, 2014 Year ended December 31, 2014
----------------------------------------- ----------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
------------- ------------- ------------- ------------- ------------- ------------
Cost of revenues
(exclusive of
depreciation and
amortization)(1) $ 121,465 $ (2,257 ) $ 119,208 $ 456,530 $ (8,648 ) $ 447,882
Selling, general
and
administrative
expenses(2) $ 49,761 $ (5,863 ) $ 43,898 $ 163,666 $ (16,876 ) $ 146,790
Income from
operations(3) $ 24,015 $ 12,175 $ 36,190 $ 86,183 $ 36,959 $ 123,142
Operating margin 11.9 % 6.0 % 17.9 % 11.8 % 5.1 % 16.9 %
Net income(4) $ 18,423 $ 12,976 $ 31,399 $ 69,641 $ 40,958 $ 110,599
Diluted earnings
per share(5) $ 0.37 $ 0.62 $ 1.40 $ 2.22
Three months ended December 31, 2013 Year ended December 31, 2013
--------------------------------------- ----------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
------------ ------------- ------------ ------------- ------------- ------------
Cost of revenues
(exclusive of
depreciation and
amortization)(1) $ 97,627 $ (1,467 ) $ 96,160 $ 347,650 $ (4,823 ) $ 342,827
Selling, general
and
administrative
expenses(2) $ 32,980 $ (2,062 ) $ 30,918 $ 116,497 $ (8,545 ) $ 107,952
Income from
operations(3) $ 23,192 $ 4,188 $ 27,380 $ 76,493 $ 15,346 $ 91,839
Operating margin 14.7 % 2.7 % 17.4 % 13.8 % 2.7 % 16.5 %
Net income(4) $ 18,759 $ 4,900 $ 23,659 $ 61,994 $ 18,146 $ 80,140
Diluted earnings
per share (5) $ 0.38 $ 0.48 $ 1.28 $ 1.66
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 Year Ended
December 31, December 31,
----------------------- -----------------------
2014 2013 2014 2013
----------- ----------- ------------ ----------
Stock-based compensation
expense $ 5,839 $ 1,892 $ 15,972 $ 8,327
Acquisition-related costs 24 170 904 218
----------- ----------- ------------ ----------
Total adjustments to GAAP
selling, general and
administrative expenses $ 5,863 $ 2,062 $ 16,876 $ 8,545
----------- ----------- ------------ ----------
(3) Adjustments to GAAP income from operations:
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2014 2013 2014 2013
------------ ----------- ------------ -----------
Stock-based compensation
expense $ 8,096 $ 3,359 $ 24,620 $ 13,150
reported within cost of
revenues 2,257 1,467 8,648 4,823
reported within selling,
general and administrative
expenses 5,839 1,892 15,972 8,327
Acquisition-related costs 24 170 904 218
Amortization of purchased
intangible assets (31 ) 659 5,349 2,785
Goodwill impairment loss 2,241 - 2,241 -
One-time charges 1,845 - 3,845 (807 )
------------ ----------- ------------ -----------
Total adjustments to GAAP
income from operations $ 12,175 $ 4,188 $ 36,959 $ 15,346
------------ ----------- ------------ -----------
(4) Adjustments to GAAP net income:
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2014 2013 2014 2013
------------ ----------- ------------ -----------
Stock-based compensation
expense $ 8,096 $ 3,359 $ 24,620 $ 13,150
reported within cost of
revenues 2,257 1,467 8,648 4,823
reported within selling,
general and administrative
expenses 5,839 1,892 15,972 8,327
Acquisition-related costs 24 170 904 218
Amortization of purchased
intangible assets (31 ) 659 5,349 2,785
Goodwill impairment loss 2,241 - 2,241 -
Change in fair value of
contingent consideration 1,924 - 1,924 -
One-time charges 1,845 - 3,845 (807 )
Foreign exchange loss/ (gain) (1,123 ) 712 2,075 2,800
------------ ----------- ------------ -----------
Total adjustments to GAAP net
income $ 12,976 $ 4,900 $ 40,958 $ 18,146
------------ ----------- ------------ -----------
(5) There were no adjustments to GAAP average diluted common shares
outstanding during the three and year ended December 31, 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#1897468]
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Datum: 25.02.2015 - 23:47 Uhr
Sprache: Deutsch
News-ID 374346
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