Newtown, PA, Aug 3, 2012 - (ACN Newswire) - EPAM Systems, Inc. (NYSE: EPAM), a leading software engineering and IT outsourcing (ITO) provider with development centers across Central and Eastern Europe (CEE), today reported the following financial results for the quarter ended June 30, 2012:
- Quarterly revenues increased to $103.8 million, up 10% over first quarter 2012 and 29.5% compared to the year-ago quarter.
- GAAP income from operations was $16.8 million, an increase of 54.7% compared to $10.9 million in the second quarter of 2011.
- Non-GAAP income from operations increased to $19.1 million, an increase of 39.5% compared to $13.7 million in the second quarter of 2011.
- Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.29, compared to $(0.41) in the year-ago quarter.
- Quarterly diluted EPS on a non-GAAP basis was $0.37, compared to $0.26 in the year-ago quarter, or a 42.3% increase.
- Headcount for IT Professionals increased 25.7% to 7,750 as of June 30, 2012 from 6,166 as of June 30, 2011.
"We are pleased with another strong quarter. We saw strong growth in Europe and the US, as well as across most of our key verticals." said Arkadiy Dobkin, CEO and President of EPAM Systems. "Although the macroeconomic environment remains uncertain and customers' decision times are longer, we remain confident in our ability to identify and provide differentiated solutions that address our customers' mission critical needs."
The Company generated $1.6 million in cash from operations during the first six months of 2012. As of June 30, 2012, the Company had cash and cash equivalents of $104.9 million.
Financial Outlook
- Third quarter 2012 revenues are expected to be in the range of $107 million to $109 million.
- Third quarter 2012 non-GAAP diluted EPS is expected to be in the range of $0.34 to $0.36. This expectation is based on an estimated weighted average of 45.6 million diluted shares during fiscal 2012.
- Full year 2012 revenues are expected to be between $412 million and $418 million, with non-GAAP net income growth in the range of 16% to 18%.
Conference Call Information
The Company will hold a conference call to discuss its second quarter results at 8:00 a.m. EST this morning. A live webcast of the call may be accessed over the Internet from the Company's Investor Relations website at investors.epam.com. Participants should follow the instructions provided on the website to download and install the necessary audio applications. The conference call is also available by dialing 877-941-1427 (domestic) or 1-480-629-9664 (international) and entering passcode 4553720. Participants should ask for the EPAM Systems second quarter earnings conference call.
A replay of the live conference call will be available approximately one hour after the call. The replay will be available on the Company's website or by dialing +1-877-870-5176 (domestic) or +1-858-384-5517 (international) and entering the replay passcode 4553720. The telephonic replay will be available until Friday, August 10, 2012.
About EPAM Systems
Established in 1993, EPAM Systems, Inc. (NYSE: EPAM) is a leading global IT services provider with delivery centers throughout Central and Eastern Europe. Headquartered in the United States, EPAM employs over 7,700 IT professionals and provides services to clients worldwide using a global delivery model through its client management and delivery operations in the United States, Belarus, Hungary, Russia, Ukraine, UK, Germany, Kazakhstan, Sweden, Switzerland, Poland and Canada.
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 the company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing the company'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, amortization of purchased intangible assets, goodwill impairment, foreign exchange gains and losses, and certain other non-recurring charges. 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 the Company'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 is 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@epam.com
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- -----------------------
2012 2011 2012 2011
-------------- ------------ ----------- -----------
(in thousands, except share and per share data)
Revenues $103,800 $80,176 $198,183 $152,978
Operating expenses:
Cost of revenues
(exclusive of
depreciation and
amortization) 63,803 48,816 123,978 94,321
Selling, general
and administrative
expenses 20,711 16,805 38,338 30,598
Depreciation and
amortization
expense 2,423 1,959 4,634 3,649
Goodwill impairment
loss - 1,697 - 1,697
Other operating
expenses, net 33 21 619 23
-------------- ------------ ----------- -----------
Income from operations 16,830 10,878 30,614 22,690
Interest and other income,
net 460 428 936 615
Foreign exchange loss
(1,394) (703) (1,314) (837)
-------------- ------------ ----------- -----------
Income before provision for
income taxes 15,896 10,603 30,236 22,468
Provision for income taxes 2,575 2,326 4,816 4,449
-------------- ------------ ----------- -----------
Net
Income $13,321 $8,277 $25,420 $18,019
-------------- ------------ ----------- -----------
Comprehensive income $10,857 $8,445 $24,568 $19,438
-------------- ------------ ----------- -----------
Accretion of preferred stock - $(15,271) - $(17,563)
Net income allocated to - - $(3,176) $ (4,188)
participating securities
Net income/ (loss) available $13,321 $(6,994) $22,244 $ (3,732)
for common stockholders
Net income/ (loss) per share
of common stock:
Basic (common) $0.31 $(0.41) $0.60 $(0.22)
Basic (puttable - - - $0.19
common)
Diluted (common) $0.29 $(0.41) $0.55 $(0.22)
Diluted (puttable - - - $0.18
common)
Shares used in calculation of
net income per share of
common stock:
Basic (common) 42,475 17,056 36,987 17,055
Basic (puttable - 57 - 57
common)
Diluted (common) 46,382 20,300 40,820 20,299
Diluted (puttable - 57 - 57
common)
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of
June 30, As of December 31,
2012 2011
--------------------- ------------------------
(in thousands, except share and per share
data)
Assets
Current assets
Cash and cash equivalents $104,930 $88,796
Accounts receivable, net of
allowance of $1,875 and $2,250,
respectively 68,186 59,472
Unbilled revenues 36,817 24,475
Prepaid and other current assets 10,323 6,436
Restricted cash, current 516 -
Deferred tax assets, current 4,000 4,384
--------------------- ------------------------
Total current assets 224,772 183,563
Property and equipment, net 40,219 35,482
Restricted cash, long-term 1,921 2,582
Intangible assets, net 6,227 1,251
Goodwill 12,436 8,169
Deferred tax assets, long-term 1,866 1,875
Other long-term assets 553 2,691
--------------------- ------------------------
Total assets $287,994 $235,613
--------------------- ------------------------
Liabilities
Current liabilities
Accounts payable $4,345 $2,714
Accrued expenses 10,296 24,782
Deferred revenue 4,607 6,949
Due to employees 13,326 8,234
Taxes payable 10,095 8,712
Deferred tax liabilities,
current 1,232 1,736
--------------------- ------------------------
Total current
liabilities 43,901 53,127
Taxes payable, long-term 1,218 1,204
Deferred tax liabilities, long-
term 269 283
--------------------- ------------------------
Total liabilities 45,388 54,614
--------------------- ------------------------
Commitments and contingencies
Preferred stock, $.001 par
value; 0 and 5,000,000
authorized at June 30, 2012 and
December 31, 2011; 0 and
2,054,935 Series A-1 convertible
redeemable preferred stock
issued and outstanding at June
30, 2012 and December 31, 2011;
$.001 par value 0 and 945,114
authorized at June 30, 2012 and
December 31, 2011, 0 and
384,804 Series A-2 convertible
redeemable preferred stock
issued and outstanding at June
30, 2012 and December 31, 2011 -
85,940
Stockholders' equity
Common stock, $.001 par value;
160,000,000 authorized;
44,049,919 and 18,914,616 shares
issued, 42,767,545 and
17,158,904 shares outstanding at
June 30, 2012 and December
31, 2011, respectively 43 17
Preferred stock, $.001 par
value; 0 and 290,277 authorized
Series A-3 convertible preferred
stock issued and outstanding at
June 30, 2012 and December
31, 2011, respectively - -
Additional paid-in capital 158,667 40,020
Retained earnings 99,928 74,508
Treasury stock (11,666) (15,972)
Accumulated other comprehensive
loss (4,366) (3,514)
--------------------- ------------------------
Total stockholders' equity 242,606 95,059
--------------------- ------------------------
Total liabilities and
stockholders' equity $287,994 $235,613
--------------------- ------------------------
EPAM SYSTEMS, INC. AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
2012 2012 2012 2012 2012 2012
Non- Non-
GAAP Adjustments GAAP GAAP Adjustments GAAP
--------- ------------- --------- --------- ------------- ---------
Income from
operations $16,830 $2,220 $19,050 (a) $30,614 $4,574 $35,188 (a)
--------- ------------- --------- --------- ------------- ---------
Operating
margin 16.2% 2.2% 18.4% 15.4% 2.4% 17.8%
--------- ------------- --------- --------- ------------- ---------
Net income $13,321 $3,614 $16,935 (b) $25,420 $5,888 $31,308 (b)
--------- ------------- --------- --------- ------------- ---------
Diluted
earnings
per share $0.29 $0.37 (c) $0.55 $0.69
(c)
--------- --------- --------- ---------
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
2011 2011 2011 2011 2011 2011
Non- Non-
GAAP Adjustments GAAP GAAP Adjustments GAAP
--------- ------------- --------- --------- ------------- ---------
Income from
operations $10,878 $2,781 $13,659 (a) $22,690 $3,724 $26,414 (a)
--------- ------------- --------- --------- ------------- ---------
Operating
margin 13.6% 3.4% 17.0% 14.8% 2.5% 17.3%
--------- ------------- --------- --------- ------------- ---------
Net income $8,277 $3,484 $11,761 (b) $18,019 $4,561 $22,580 (b)
--------- ------------- --------- --------- ------------- ---------
Diluted
earnings
per share ($0.41) $0.26 (c) ($0.22) $0.51
(c)
--------- --------- --------- ---------
Notes:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- -------------------------
2012 2011 2012 2011
-------------- ------------- ------------ ------------
(a)
Adjustment to GAAP
Income from operations: 2,220 2,781 4,574 3,724
Stock-based
compensation, of which: 1,773 655 3,323 1,369
reported in cost of
revenues 884 260 1,450 530
reported in sales,
general and
administrative
expenses 889 395 1,873 839
Amortization of
purchased intangible
assets 140 240 280 448
M&A costs 307 189 387 210
Goodwill write-off - 1,697 - 1,697
One-time charges - - 584 -
(b)
Adjustment to GAAP Net
Income: 3,614 3,484 5,888 4,561
Stock-based
compensation, of which: 1,773 655 3,323 1,369
reported in cost of
revenues 884 260 1,450 530
reported in sales,
general and
administrative
expenses 889 395 1,873 839
Amortization of
purchased intangible
assets 140 240 280 448
M&A costs 307 189 387 210
One-time charges - - 584 -
Goodwill write-off - 1,697 - 1,697
Foreign exchange
(gains) and losses 1,394 703 1,314 837
(c)
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, 2010, and (ii) the conversion of the
outstanding preferred stock into common stock on an as-converted basis. The
following table presents the non-GAAP weighted average diluted common shares
outstanding for the periods presented:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- -------------------------
2012 2011 2012 2011
-------------- ------------- ------------ ------------
Non-GAAP weighted
average diluted common
shares outstanding 46,382 45,096 45,449 44,637
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Source: EPAM Systems, Inc. via Thomson Reuters ONE
Topic: Earnings
Source: EPAM Systems, Inc.
http://www.acnnewswire.com
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