Newtown, PA, Nov 9, 2012 - (ACN Newswire) - EPAM Systems, Inc. (NYSE: EPAM), a leading provider of complex software engineering solutions and a leader in Central and Eastern European IT service delivery, today reported the following financial results for its quarter ended September 30, 2012:
-- Quarterly revenues increased to $110.1 million, up 6.0% sequentially, and 27.4% compared to the year-ago quarter.
-- GAAP income from operations was $16.7 million, a decrease of 0.9% compared to $16.9 million in the third quarter of 2011.
-- Non-GAAP income from operations was $19.2 million, an increase of 5.8% compared to $18.1 million in the third quarter of 2011.
-- Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.30, compared to $0.33 in the year-ago quarter.
-- Quarterly diluted EPS on a non-GAAP basis was $0.37, compared to $0.39 in the year-ago quarter
-- Headcount for IT Professionals increased 24.1% to 8,132 as of September 30, 2012 from 6,552 as of September 30, 2011.
"We are pleased with our continued consistent performance and strong growth during the quarter despite the volatile global economic environment," said Arkadiy Dobkin, CEO and President of EPAM Systems. "These results continue to reaffirm our unique value proposition which comes from almost 20 years of software product engineering expertise, and showcase the results of our focus on expanding vertical expertise and domain knowledge, developing the best engineering talent and our commitment to customer satisfaction and loyalty."
The Company generated $11.1 million in cash from operations during the quarter. As of September 30, 2012, the Company had cash and cash equivalents of $105.9 million.
Financial Outlook
-- Fourth quarter 2012 revenues are expected to be in the range of $115 million to $118 million.
-- Fourth quarter 2012 non-GAAP diluted EPS is expected to be in the range of $0.35 to $0.37. These non-GAAP diluted EPS estimates are based on an estimated 2012 fiscal year weighted average of 47.4 million diluted shares.
-- Full year 2012 revenues are expected to be between $423 million and $426 million, with non-GAAP net income growth in the range of 18% to 20%.
Awards and Recognition
During the quarter, EPAM was recognized by a number of industry analysts for its
continued excellence in product development and deep domain expertise:
-- EPAM was recognized among the top 10 Market Leaders in Industry Verticals by Zinnov's "Global R&D Service Providers Rating (GSPR) 2012". EPAM was named as one of the three best companies in the ISV (Enterprise Software) and Consumer Software categories, confirming its capability in implementing a go-to-market concept for software products, introducing strategic innovations for its customers, and working with the world's largest ISVs (Independent Software Vendors). Zinnov also ranked EPAM in the "Leadership Zone" in Cloud Computing and Enterprise Mobility.
-- EPAM was been named an IT Services Leader in "Global Product Development", "Top Mid-Tier ADM Companies", and "Top Mid-Market Enterprise Applications Deployment" categories by Global Services. EPAM has also been recognized as a leader in "Mid-Tier Leaders - Testing Services".
-- EPAM has been ranked #37 on The 2012 Global Outsourcing 100(R) list. EPAM has also been recognized in seven of IAOP's sublists: Best 20 Leaders in Technology (Hardware and Software); Best 10 Leaders in Entertainment & Media; Best 20 Leaders in Information/ Communication Technology Services; Top List Climbers Year to Year; Best Leaders in Revenue Growth.
-- EPAM was included in the InformationWeek 500, an annual listing of the United States' most innovative users of business technology. EPAM was recognized for designing and implementing a suite of innovative systems to support globally distributed software engineering services delivery.
-- EPAM Canada was selected as the Bronze Winner of Best Mobile Solution at the 2012 CDN Awards Gala. CDN, Canada's No.1 IT channel publication, ranks Canadian solution providers in ten categories including Best Enterprise Solution, Best Cloud Computing Solution, Best Collaborative Solution and Best Mobile Solution.
Conference Call Information
The Company will hold a conference call to discuss its third quarter results on Friday, November 9, 2012 at 8:00 a.m. Eastern. 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 also is available by dialing +1-877-941-1427 (domestic) or +1-480-629-9664 (international) and entering passcode 4570358. Participants should ask for the EPAM Systems third 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 4570358. The telephonic replay will be available until Friday, November 16, 2012.
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 over 8,100 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.
EPAM is recognized among the top companies in IAOP's "The 2012 Global Outsourcing 100", featuring EPAM in a variety of sub-lists, including "Leaders - Companies in Eastern Europe". The Company is also ranked among the best global service providers on "The 2012 Global Services 100" by Global Services Magazine and Neogroup, which names EPAM "Leaders - Global Product Development" category.
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, 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 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 EPAM's 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 Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
(in thousands, except share and per share
data)
Revenues $110,078 $86,423 $308,261 $239,401
Operating expenses:
Cost of revenues (exclusive of
depreciation and amortization)
69,099 51,627 193,077 145,948
Selling, general and
administrative expenses 21,153 15,822 59,491 46,420
Depreciation and amortization
expense 3,040 2,083 7,674 5,732
Goodwill impairment loss - - - 1,697
Other operating expenses, net 50 - 669 23
---------- ---------- ---------- ----------
Income from operations 16,736 16,891 47,350 39,581
Interest and other income, net 486 385 1,422 1,000
Foreign exchange loss (635) (2,301) (1,949) (3,138)
---------- ---------- ---------- ----------
Income before provision for
income taxes 16,587 14,975 46,823 37,443
Provision for income taxes 2,522 1,025 7,338 5,474
---------- ---------- ---------- ----------
Net Income $14,065 $13,950 $39,485 $31,969
---------- ---------- ---------- ----------
Comprehensive income $16,769 $12,130 $41,337 $31,568
---------- ---------- ---------- ----------
Accretion of preferred stock - - - (17,563)
Net income allocated to - (7,822) (3,259) (12,010)
participating securities
Net income/(loss) available for 14,065 6,128 36,226 2,396
common stockholders
Net income/(loss) per share of
common stock:
Basic (common) 0.33 0.36 0.93 0.14
Basic (puttable common) - 0.36 - 0.40
Diluted (common) 0.30 0.33 0.85 0.14
Diluted (puttable common) - 0.33 - 0.37
Shares used in calculation of net
income per share of common stock:
Basic (common) 42,952 17,124 38,990 17,078
Basic (puttable common) - 18 - 44
Diluted (common) 46,501 20,656 42,729 20,156
Diluted (puttable common) - 18 - 44
EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of September 30, As of December 31,
2012 2011
--------------------- ----------------------
(in thousands, except share and per share
data)
Assets
Current assets
Cash and cash equivalents $105,885 $88,796
Accounts receivable, net of
allowance of $2,355 and $2,250, 67,867 59,472
respectively
Unbilled revenues 44,342 24,475
Prepaid and other current assets 13,270 6,436
Time deposits 1,545 -
Restricted cash, current 948 -
Deferred tax assets, current 3,815 4,384
--------------------- ----------------------
Total current assets 237,672 183,563
Property and equipment, net 52,948 35,482
Restricted cash, long-term 674 2,582
Intangible assets, net 6,014 1,251
Goodwill 11,305 8,169
Deferred tax assets, long-term 3,529 1,875
Other long-term assets 578 2,691
--------------------- ----------------------
Total assets $312,720 $235,613
--------------------- ----------------------
Liabilities
Current liabilities
Accounts payable $2,558 $2,714
Accrued expenses 13,485 24,782
Deferred revenue 3,847 6,949
Due to employees 12,137 8,234
Taxes payable 12,802 8,712
Deferred tax liabilities, 1,243 1,736
current
--------------------- ----------------------
Total current liabilities 46,072 53,127
Taxes payable, long-term 1,228 1,204
Deferred tax liabilities, long- 269 283
term
--------------------- ----------------------
Total liabilities $47,569 $54,614
--------------------- ----------------------
Commitments and contingencies
Preferred stock, $.001 par value;
0 and 5,000,000 authorized at
September 30, 2012 and
December 31, 2011; 0 and
2,054,935 Series A-1 convertible
redeemable preferred stock issued
and outstanding at September 30,
2012 and December 31, 2011; $.001 - 85,940
par value 0 and 945,114 authorized
at September 30, 2012 and
December 31, 2011, 0 and 384,804
Series A-2 convertible redeemable
preferred stock issued and
outstanding at September 30, 2012
and December 31, 2011
Stockholders' equity
Common stock, $.001 par value;
160,000,000 authorized;
44,677,738 and 18,914,616 shares
issued, 43,395,364 and 17,158,904 43 17
shares outstanding at
September 30, 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
September 30, 2012 and
December 31, 2011, respectively
Additional paid-in capital 164,443 40,020
Retained earnings 113,993 74,508
Treasury stock (11,666) (15,972)
Accumulated other comprehensive (1,662) (3,514)
loss
--------------------- ----------------------
Total stockholders' equity 265,151 95,059
--------------------- ----------------------
Total liabilities and $312,720 $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 Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2012 2012 2012 2012 2012 2012
Non- Non-
GAAP Adjustments GAAP GAAP Adjustments GAAP
--------- ------------- --------- --------- ------------- ---------
Income
from
operations (a)
$16,736 $2,464 $19,200 (a) $47,350 $7,038 $54,388
--------- ------------- --------- --------- ------------- ---------
Operating
margin
15.2% 2.20% 17.4% 15.4% 2.20% 17.6%
--------- ------------- --------- --------- ------------- ---------
Net income (b)
$14,065 $3,099 $17,164 (b) $39,485 $8,987 $48,472
--------- ------------- --------- --------- ------------- ---------
Diluted
earnings
per
share
$0.30 $0.37 (c) $0.85 $1.06 (c)
--------- --------- --------- ---------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2011 2011 2011 2011 2011 2011
Non- Non-
GAAP Adjustments GAAP GAAP Adjustments GAAP
--------- ------------- --------- --------- ------------- ---------
Income
from
operations (a)
$16,891 $1,258 $18,149 (a) $39,581 $4,982 $44,563
--------- ------------- --------- --------- ------------- ---------
Operating
margin
19.5% 1.5% 21.0% 16.5% 2.1% 18.6%
--------- ------------- --------- --------- ------------- ---------
Net income (b)
$13,950 $3,559 $17,509 (b) $31,969 $8,120 $40,089
--------- ------------- --------- --------- ------------- ---------
Diluted
earnings
per
share
$0.33 $0.39 (c) $0.14 $0.89 (c)
--------- --------- --------- ---------
Notes:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
2012 2011 2012 2011
------------ ------------ ------------ -----------
(a)
Adjustment to GAAP
Income from
operations: 2,464 1,258 7,038 4,982
Stock-based
compensation, of
which: 2,046 785 5,369 2,154
reported in cost of
revenues 1,036 417 2,486 947
reported in sales,
general and
administrative
expenses 1,010 368 2,883 1,207
Amortization of
purchased intangible
assets 431 191 711 639
M&A costs (13) 282 374 492
Goodwill write-off - - - 1,697
One-time charges - - 584 -
(b)
Adjustment to GAAP
Net Income: 3,099 3,559 8,987 8,120
Stock-based
compensation, of
which: 2,046 785 5,369 2,154
reported in cost of
revenues 1,036 417 2,486 947
reported in sales,
general and
administrative
expenses 1,010 368 2,883 1,207
Amortization of
purchased intangible
assets 431 191 711 639
M&A costs (13) 282 374 492
One-time charges - - 584 -
Goodwill write-off - - - 1,697
Foreign exchange
(gains) and losses 635 2,301 1,949 3,138
(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 Nine Months Ended
Ended
September 30, September 30,
----------------- ---------------------------------
2012 2011 2012 2011
-------- -------- ----------------- ---------------
Non-GAAP weighted average
diluted common shares
outstanding 46,501 45,414 45,803 44,896
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Source: EPAM Systems, Inc. via Thomson Reuters ONE
Topic: Earnings
Source: EPAM Systems, Inc.
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