2013-02-28 02:17:27 -
* Fourth Quarter revenues up 14% sequentially and 32% year-over-year
* Annual revenues of $433.8 million, up 30% year-over-year
* Double digit growth in profitability achieved in both fourth quarter and
full year 2012
* 2013 revenues expected to increase by 23% to 25%
Newtown, PA - February 27, 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 record results for its
fourth quarter and full year ended December 31, 2012.
Arkadiy Dobkin, CEO and President commented, "Our strong fourth quarter and full
year 2012 results demonstrate the competitiveness of our business proposition.
By combining our core strengths in software engineering with our strong
expertise in a number of emerging technologies and our fast developing domain
knowledge, EPAM is differentiated as a provider of high quality, complex
technology and business solutions to meet the rapidly-changing needs of global
clients. Consequently, we reported significant year-over-year revenue growth
across our three geographic regions and most of our key vertical markets in both
the fourth quarter and full year 2012.
Profitability was in line with our guidance, as we continued to post double-
digit year-on-year improvement in both the fourth quarter and full year 2012,
while investing in people and infrastructure that will drive future growth. At
the end of the fourth quarter, we completed an important strategic transaction
with the acquisition of Empathy Lab, a digital strategy and multi-channel
experience design firm that significantly strengthens our position as a global
provider of end-to-end digital services and multi-channel eCommerce solutions.
The integration of Empathy Lab is currently underway, and we are working
together on business development initiatives to drive revenue synergies."
Fourth Quarter 2012 Highlights
* Revenues increased to a record $125.5 million, up 32.0% year-on-year and
14.0% sequentially
* GAAP income from operations was $18.7 million, an increase of 20.9% compared
to $15.4 million in the fourth quarter of 2011
* Non-GAAP income from operations was $20.6 million, an increase of $4.2
million or 26.0%, from $16.3 million in the fourth quarter of 2011
* Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.32, up
from $0.29 in the year-ago quarter
* Non-GAAP quarterly diluted EPS was $0.37, up 23% from $0.30 in the year-ago
quarter
EPAM generated cash from operations of $35.8 million in the fourth quarter of
2012, an increase of $9.4 million generated over the fourth quarter of 2011.
Reconciliations of non-GAAP financial measures to operating results and diluted
EPS are included at the end of this release.
Full Year 2012 Highlights
* Revenues increased 29.7% to a record $433.8 million, up from $334.5 million
reported in 2011
* GAAP income from operations for 2012 was $66.0 million, an increase of
20.0% over 2011
* Non-GAAP income from operations was $74.9 million compared to $60.9 million
in 2011
* Diluted EPS on a GAAP basis was $1.17, compared to $0.63 in the previous
year
* Non-GAAP diluted EPS was $1.42, compared to $1.19 in 2011
* Net headcount for IT professionals increased 21.9% to 8,495 as of December
31, 2012, from 6,968 as of December 31, 2011
For full year 2012, EPAM generated operating cash flow of $48.5 million. As of
December 31, 2012 EPAM had cash and cash equivalents of $118.1 million.
Full Year and First Quarter 2013 Outlook
"Based on our visibility and the market conditions we see for our service
offerings, we are confident that our growth momentum will continue in 2013 and
beyond. To support this expansion, we will continue to invest in the development
of technical competencies that are critical to our success and to build our on-
site presence to better support complex solution delivery requirements.
Additionally, we will evaluate organic opportunities as well as acquisitions to
expand our scope of services, complement existing technical expertise, and add
new vertical markets," concluded Mr. Dobkin.
Based on current conditions, EPAM expects year-over-year revenue 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 increase in the effective tax
rate to approximately 20%.
For the first quarter of 2013, EPAM expects revenue between $122 million and
$125 million, representing a growth rate of 29% to 31% over first quarter 2012
revenue, which includes results from two acquisitions made in 2012 that were not
in the comparable period. First quarter 2013 non-GAAP diluted EPS is expected
to be in the range of $0.32 to $0.34 based on an estimated first quarter 2013
weighted average of 47.6 million diluted shares.
Conference Call Information
EPAM will hold a conference call to discuss its fourth quarter and full year
2012 results at 8:00 a.m. Eastern time, on Thursday, February 28, 2013. A live
webcast of the call may be accessed over the Internet from EPAM'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 also is available by dialing 1-877-407-0784
(domestic) or 1-201-689-8560 (international) and entering passcode 409154.
Participants should ask for the EPAM Systems fourth quarter and full year 2012
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 409154. The telephonic replay will be available until March
10, 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 8,500 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
M&A 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
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
Three Months Ended Year Ended
December 31, December 31,
---------------------------- ---------------------------
2012 2011 2012 2011
-------------- ------------- ------------- -------------
(in thousands, except share and per share data)
Revenues $125,538 $95,127 $433,799 $334,528
Operating expenses:
Cost of revenues
(exclusive of
depreciation and
amortization) 77,284 59,388 270,361 205,336
Selling, general
and administrative
expenses 26,377 18,510 85,868 64,930
Depreciation and
amortization
expense 3,208 1,806 10,882 7,538
Goodwill
impairment loss
- - - 1,697
Other operating
expenses, net
13 (4) 682 19
-------------- ------------- ------------- -------------
Income from
operations 18,656 15,427 66,006 55,008
Interest and other
income, net 519 422 1,941 1,422
Foreign exchange
loss
(135) (500) (2,084) (3,638)
-------------- ------------- ------------- -------------
Income before
provision for income
taxes 19,040 15,349 65,863 52,792
Provision for income
taxes 4,041 2,965 11,379 8,439
-------------- ------------- ------------- -------------
Net Income $14,999 $12,384 $54,484 $44,353
-------------- ------------- ------------- -------------
Comprehensive income $15,640 $11,535 $56,977 $43,103
-------------- ------------- ------------- -------------
Accretion of preferred - - -
(17,563)
stock
Net income allocated
to participating - (6,941) (3,341) (15,025)
securities
Net income available
for common 14,999 5,443 51,143 11,765
stockholders
Net income per share
of common stock:
Basic (common) 0.35 0.32 1.27 0.69
Basic (puttable - 0.32 - 1.42
common)
0.32 0.29 0.63
Diluted (common) 1.17
Diluted (puttable - 0.29 - 0.77
common)
Shares used in
calculation of net
income per share of
common stock:
Basic (common) 43,294 17,141 40,190 17,094
Basic (puttable - 18 - 18
common)
Diluted (common) 46,604 20,520 43,821 20,473
Diluted (puttable - 18 - 18
common)
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of As of December 31,
December 31, 2011
2012
-------------- -----------------------------
(in thousands, except share and per share
data)
Assets
Current assets
Cash and cash equivalents $118,112 $88,796
Accounts receivable, net of
allowance of $2,203 and $2,250, 78,906 59,472
respectively
Unbilled revenues 33,414 24,475
Prepaid and other current assets 12,264 6,436
Time deposits 1,006 -
Restricted cash, current 660 -
Deferred tax assets, current 6,593 4,384
-------------- -----------------------------
Total current assets 250,955 183,563
Property and equipment, net 53,135 35,482
Restricted cash, long-term 467 2,582
Intangible assets, net 16,834 1,251
Goodwill 22,698 8,169
Deferred tax assets, long-term 6,093 1,875
Other long-term assets 632 2,691
-------------- -----------------------------
Total assets $350,814 $235,613
-------------- -----------------------------
Liabilities
Current liabilities
Accounts payable $6,095 $2,714
Accrued expenses 19,814 24,782
Deferred revenue 6,369 6,949
Due to employees 12,026 8,234
Taxes payable 14,557 8,712
Deferred tax liabilities, 491 1,736
current
-------------- -----------------------------
Total current liabilities 59,352 53,127
Deferred revenue, long-term 1,263 -
Taxes payable, long-term 1,228 1,204
Deferred tax liabilities, long- 2,691 283
term
-------------- -----------------------------
Total liabilities 64,534 54,614
-------------- -----------------------------
Commitments and contingencies
Preferred stock, $.001 par value;
0 and 5,000,000 authorized at
December 31, 2012 and December
31, 2011; 0 and 2,054,935 Series
A-1 convertible redeemable
preferred stock issued and
outstanding at December 31, 2012
and December 31, 2011; $.001 par - 85,940
value 0 and 945,114 authorized at
December 31, 2012 and December
31, 2011, 0 and 384,804 Series A-
2 convertible redeemable preferred
stock issued and outstanding at
December 31, 2012 and December
31, 2011
Stockholders' equity
Common stock, $.001 par value;
160,000,000 authorized;
45,398,523 and 18,914,616 shares
issued, 44,442,494 and 17,158,904 44 17
shares outstanding at December
31, 2012 and December 31, 2011,
respectively
Preferred stock, $.001 par value;
0 and 290,277 authorized Series A-
3 convertible preferred stock - -
issued and outstanding at December
31, 2012 and December 31, 2011,
respectively
Additional paid-in capital 166,962 40,020
Retained earnings 128,992 74,508
Treasury stock (8,697) (15,972)
Accumulated other comprehensive (1,021) (3,514)
loss
-------------- -----------------------------
Total stockholders' equity 286,280 95,059
-------------- -----------------------------
Total liabilities and $350,814 $235,613
stockholders' equity
-------------- -----------------------------
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 Year Ended
December 31, December 31,
--------------------------------- ---------------------------------
2012 2012 2012 2012 2012 2012
Non- Non-
GAAP Adjustments GAAP GAAP Adjustments GAAP
--------- ------------- --------- --------- ------------- ---------
Income
from
operations $18,656 $1,896 $20,552 (a) $66,006 $8,934 $74,940 (a)
--------- ------------- --------- --------- ------------- ---------
Operating
margin 14.9% 1.50% 16.4% 15.2% 2.10% 17.3%
--------- ------------- --------- --------- ------------- ---------
Net income $14,999 $2,031 $17,030 (b) $54,484 $11,018 $65,502 (b)
--------- ------------- --------- --------- ------------- ---------
Diluted
earnings
per
share $0.32 $0.37 (c) $1.17 $1.42
(c)
--------- --------- --------- ---------
Three Months Ended Year Ended
December 31, December 31,
--------------------------------- ---------------------------------
2011 2011 2011 2011 2011 2011
Non- Non-
GAAP Adjustments GAAP GAAP Adjustments GAAP
Income
from
operations $15,427 $887 $16,314 (a) $55,008 $5,869 $60,877 (a)
--------- ------------- --------- --------- ------------- ---------
Operating
margin 16.2% 0.9% 17.1% 16.4% 1.8% 18.2%
--------- ------------- --------- --------- ------------- ---------
Net income $12,384 $1,387 $13,771 (b) $44,353 $9,507 $53,860 (b)
--------- ------------- --------- --------- ------------- ---------
Diluted
earnings
per
share $0.29 $0.30 (c) $0.63 $1.19
(c)
--------- --------- --------- ---------
Notes:
Three Months Ended Year Ended
December 31, December 31,
------------------------ -------------------------
2012 2011 2012 2011
------------ ----------- ------------- -----------
(a)
Adjustment to GAAP
Income from
operations: 1,896 887 8,934 5,869
Stock-based
compensation, of
which: 1,457 712 6,826 2,866
reported in cost of
revenues 323 418 2,809 1,365
reported in sales,
general and
administrative
expenses 1,134 294 4,017 1,501
Amortization of
purchased intangible
assets 313 140 1,024 779
M&A costs 126 35 500 527
One-time charges - - 584 -
Goodwill write-off - - - 1,697
(b)
Adjustment to GAAP
Net Income: 2,031 1,387 11,018 9,507
Stock-based
compensation, of
which: 1,457 712 6,826 2,866
reported in cost of
revenues 323 418 2,809 1,365
reported in sales,
general and
administrative
expenses 1,134 294 4,017 1,501
Amortization of
purchased intangible
assets 313 140 1,024 779
M&A costs 126 35 500 527
One-time charges - - 584 -
Goodwill write-off - - - 1,697
Foreign exchange
(gains) and losses 135 500 2,084 3,638
(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 Year Ended
December 31, December 31,
----------------- ----------------
2012 2011 2012 2011
-------- -------- -------- -------
Non-GAAP weighted average diluted common
shares outstanding 46,604 45,278 46,123 45,250
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#1681857]
