Genpact Reports Results for 2014 Full Year and Fourth Quarter
Key Financial Results – Full Year 2014
- Revenues were
$2.279 billion , up 6.9%, from$2.132 billion in 2013. - Income from operations was
$294.0 million , compared to$309.5 million in 2013. - Adjusted income from operations was
$344.2 million with a margin of 15.1%, compared to$352.6 million with a margin of 16.5% in 2013. - Net income attributable to
Genpact Limited shareholders was$192.0 million , compared to$229.7 million in 2013. - Diluted earnings per common share were
$0.85 , compared to$0.97 in 2013. - Adjusted diluted earnings per share were
$1.03 , compared to$1.13 in 2013. - The effective tax rate was 23.0%, compared to 23.6% in 2013.
- New bookings were
$2.156 billion , up from$1.440 billion in 2013.[1]
Key Financial Results – Fourth Quarter 2014
- Revenues were
$601.5 million , up 7.7%, from$558.5 million in the fourth quarter of 2013. - Income from operations was
$70.9 million , compared to$71.6 million in the fourth quarter of 2013. - Adjusted income from operations was
$81.8 million with a margin of 13.6%, compared to$85.7 million with a margin of 15.3% in the fourth quarter of 2013. - Net income attributable to
Genpact Limited shareholders was$45.8 million , compared to$48.8 million in the fourth quarter of 2013. - Diluted earnings per common share were
$0.21 , unchanged from the fourth quarter of 2013. - Adjusted diluted earnings per share were
$0.26 , compared to$0.25 in the fourth quarter of 2013.
[1] New bookings means the total contract value of new contracts, and certain renewals, extensions and changes to existing contracts. Regular renewals of contracts with no change in scope are not counted as new bookings.
N.V. 'Tiger' Tyagarajan,
For the full year 2014, revenues on a constant currency basis grew 7.9%. Excluding the
Revenues from Global Clients represented approximately 79.6% of
In the 12 months ending
76.2% of
As of
2015 Outlook
Tyagarajan continued, "There is a disruptive trend sweeping across industries requiring companies to integrate new technology and find new ways to use data and insights as a competitive advantage. Our strategy is focused on building domain-led solutions that are responsive to this trend. We believe we are on the right path to further differentiate
Conference Call to Discuss Financial Results
A live webcast of the call including slides with our comments will also be made available on the Genpact Investor Relations website at http://investors.genpact.com. For those who cannot participate in the call, a replay and podcast will be available on the
About
Safe Harbor
This press release contains certain statements concerning our future growth prospects and forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. These risks, uncertainties and other factors include but are not limited to a slowdown in the economies and sectors in which our clients operate, a slowdown in the business process management and information technology services sectors, the risks and uncertainties arising from our past and future acquisitions, our ability to convert bookings to revenues, our ability to manage growth, factors which may impact our cost advantage, wage increases, changes in tax rates and tax legislation, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the
Contact |
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Investors |
Bharani Bobba |
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+1 (203) 300-9230 |
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Media |
Gail Marold +1 (919) 345-3899 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Consolidated Balance Sheets |
|||||
(Unaudited) |
|||||
(In thousands, except per share data and share count) |
|||||
As of December 31, |
As of December 31, |
||||
2013 |
2014 |
||||
Assets |
|||||
Current assets |
|||||
Cash and cash equivalents |
$ |
571,276 |
$ |
461,788 |
|
Accounts receivable, net |
505,117 |
525,754 |
|||
Deferred tax assets |
60,638 |
45,486 |
|||
Prepaid expenses and other current assets |
139,113 |
155,480 |
|||
Total current assets |
$ |
1,276,144 |
$ |
1,188,508 |
|
Property, plant and equipment, net |
173,204 |
175,936 |
|||
Deferred tax assets |
89,305 |
59,135 |
|||
Investment in equity affiliates |
384 |
494 |
|||
Intangible assets, net |
99,116 |
114,544 |
|||
Goodwill |
953,849 |
1,057,214 |
|||
Other assets |
97,365 |
146,706 |
|||
Total assets |
$ |
2,689,367 |
$ |
2,742,537 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Consolidated Balance Sheets |
|||||
(Unaudited) |
|||||
(In thousands, except per share data and share count) |
|||||
As of December 31, |
As of December 31, |
||||
2013 |
2014 |
||||
Liabilities and equity |
|||||
Current liabilities |
|||||
Short-term borrowings |
$ |
— |
$ |
135,000 |
|
Current portion of long-term debt |
4,263 |
4,288 |
|||
Current portion of capital lease obligations |
1,405 |
1,443 |
|||
Accounts payable |
18,412 |
15,544 |
|||
Income taxes payable |
15,007 |
13,586 |
|||
Deferred tax liabilities |
614 |
1,239 |
|||
Accrued expenses and other current liabilities |
421,992 |
451,014 |
|||
Total current liabilities |
$ |
461,693 |
$ |
622,114 |
|
Long-term debt, less current portion |
653,601 |
649,314 |
|||
Capital lease obligations, less current portion |
2,657 |
2,660 |
|||
Deferred tax liabilities |
4,464 |
6,671 |
|||
Other liabilities |
242,884 |
176,642 |
|||
Total liabilities |
$ |
1,365,299 |
$ |
1,457,401 |
|
Shareholders' equity |
|||||
Preferred shares, $0.01 par value, 250,000,000 authorized, none issued |
— |
— |
|||
Common shares, $0.01 par value, 500,000,000 authorized, 231,262,576 and 218,684,205 issued and outstanding as of December 31, 2013 and December 31, 2014, respectively |
2,310 |
2,184 |
|||
Additional paid-in capital |
1,268,344 |
1,296,730 |
|||
Retained earnings |
511,699 |
398,706 |
|||
Accumulated other comprehensive income (loss) |
(459,614) |
(412,484) |
|||
Genpact Limited shareholders' equity |
$ |
1,322,739 |
$ |
1,285,136 |
|
Noncontrolling interest |
1,329 |
— |
|||
Total equity |
$ |
1,324,068 |
$ |
1,285,136 |
|
Total liabilities and equity |
$ |
2,689,367 |
$ |
2,742,537 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Consolidated Statements of Income |
||||||||
(Unaudited) |
||||||||
(In thousands, except per share data and share count) |
||||||||
Year ended December 31, |
||||||||
2012 |
2013 |
2014 |
||||||
Net revenues |
||||||||
Net revenues from services |
$ |
1,901,971 |
$ |
2,131,997 |
$ |
2,279,438 |
||
Cost of revenue |
||||||||
Services |
1,157,766 |
1,319,571 |
1,378,088 |
|||||
Gross profit |
$ |
744,205 |
$ |
812,426 |
$ |
901,350 |
||
Operating expenses: |
||||||||
Selling, general and administrative expenses |
456,611 |
484,810 |
585,646 |
|||||
Amortization of acquired intangible assets |
23,233 |
23,645 |
28,543 |
|||||
Other operating (income) expense, net |
16 |
(5,556) |
(6,870) |
|||||
Income from operations |
$ |
264,345 |
$ |
309,527 |
$ |
294,031 |
||
Foreign exchange (gains) losses, net |
(13,146) |
(20,763) |
12,363 |
|||||
Other income (expense), net |
(14,499) |
(24,308) |
(27,283) |
|||||
Income before equity-method investment activity, net and income tax expense |
$ |
262,992 |
$ |
305,982 |
$ |
254,385 |
||
Loss (gain) on equity-method investment activity, net |
(17) |
(169) |
4,795 |
|||||
Income before income tax expense |
$ |
263,009 |
$ |
306,151 |
$ |
249,590 |
||
Income tax expense |
78,419 |
71,100 |
57,419 |
|||||
Net Income |
$ |
184,590 |
$ |
235,051 |
$ |
192,171 |
||
Net income attributable to noncontrolling interest |
6,374 |
5,334 |
169 |
|||||
Net income attributable to Genpact Limited shareholders |
$ |
178,216 |
$ |
229,717 |
$ |
192,002 |
||
Net income available to Genpact Limited common shareholders |
$ |
178,216 |
$ |
229,717 |
$ |
192,002 |
||
Earnings per common share attributable to Genpact Limited common shareholders |
||||||||
Basic |
$ |
$0.80 |
$ |
1.00 |
$ |
0.87 |
||
Diluted |
$ |
$0.78 |
$ |
0.97 |
$ |
0.85 |
||
Weighted average number of common shares used in computing earnings per common share attributable to Genpact Limited common shareholders |
||||||||
Basic |
223,696,567 |
229,348,411 |
220,847,098 |
|||||
Diluted |
229,532,516 |
235,754,267 |
225,168,665 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
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Consolidated Statements of Cash Flows |
||||||||
(Unaudited) |
||||||||
(In thousands) |
||||||||
Year ended December 31, |
||||||||
2012 |
2013 |
2014 |
||||||
Operating activities |
||||||||
Net income attributable to Genpact Limited shareholders |
$ |
178,216 |
$ |
229,717 |
$ |
192,002 |
||
Net income attributable to noncontrolling interest |
6,374 |
5,334 |
169 |
|||||
Net income |
$ |
184,590 |
$ |
235,051 |
$ |
192,171 |
||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
||||||||
Depreciation and amortization |
56,089 |
52,815 |
51,064 |
|||||
Amortization of debt issue costs (including loss on extinguishment of debt) |
8,079 |
6,035 |
3,240 |
|||||
Amortization of acquired intangible assets |
23,305 |
23,645 |
28,543 |
|||||
Reserve for doubtful receivables |
3,878 |
11,420 |
3,107 |
|||||
Unrealized (gain) loss on revaluation of foreign currency asset/liability |
(13,700) |
(6,251) |
9,419 |
|||||
Equity-method investment activity, net |
(17) |
(169) |
4,795 |
|||||
Stock-based compensation expense |
32,152 |
31,129 |
28,065 |
|||||
Deferred income taxes |
(10,028) |
(1,116) |
(12,252) |
|||||
Others, net |
6,579 |
5,939 |
1,291 |
|||||
Change in operating assets and liabilities: |
||||||||
Increase in accounts receivable |
(36,171) |
(60,817) |
(24,088) |
|||||
Decrease (Increase) in other assets |
(20,525) |
9,377 |
(31,657) |
|||||
Increase (Decrease) in accounts payable |
(4,380) |
1,785 |
(7,268) |
|||||
Increase in other liabilities |
79,034 |
9,316 |
27,500 |
|||||
Increase (Decrease) in income taxes payable |
1,775 |
(6,555) |
(2,092) |
|||||
Net cash provided by operating activities |
$ |
310,660 |
$ |
311,604 |
$ |
271,838 |
||
Investing activities |
||||||||
Purchase of property, plant and equipment |
(83,337) |
(48,879) |
(62,577) |
|||||
Proceeds from sale of property, plant and equipment |
500 |
3,442 |
564 |
|||||
Investment in equity affiliates |
(205) |
— |
— |
|||||
Short term deposits placed |
(43,978) |
(55,001) |
(25,000) |
|||||
Redemption of short term deposits |
25,638 |
69,249 |
25,000 |
|||||
Payment for business acquisitions, net of cash acquired |
(55,901) |
(49,235) |
(130,809) |
|||||
Proceeds from divestiture of business, net of cash divested |
— |
1,982 |
— |
|||||
Net cash used for investing activities |
$ |
(157,283) |
$ |
(78,442) |
$ |
(192,822) |
||
Financing activities |
||||||||
Repayment of capital lease obligations |
(2,279) |
(1,803) |
(2,095) |
|||||
Proceeds from long-term debt |
675,000 |
121,410 |
— |
|||||
Repayment of long-term debt |
(106,688) |
(123,098) |
(6,750) |
|||||
Proceeds from Short-term borrowings |
80,000 |
275,000 |
195,000 |
|||||
Repayment of Short-term borrowings |
(253,004) |
(355,000) |
(60,000) |
|||||
Proceeds from issuance of common shares under stock-based compensation plans |
26,227 |
45,859 |
30,144 |
|||||
Payment for net settlement of stock based awards |
(2,103) |
(9,315) |
(25,975) |
|||||
Payment of earn-out and deferred consideration |
(587) |
(3,868) |
(1,088) |
|||||
Cost incurred in relation to debt amendment and refinancing |
(15,266) |
(8,104) |
— |
|||||
Distribution to noncontrolling interest |
(5,760) |
(6,423) |
(1,487) |
|||||
Expenses related to stock purchase |
— |
— |
(2,543) |
|||||
Stock purchased and retired |
— |
— |
(302,625) |
|||||
Dividend Paid |
(501,620) |
— |
— |
|||||
Net cash used for financing activities |
$ |
(106,080) |
$ |
(65,342) |
$ |
(177,419) |
||
Effect of exchange rate changes |
3,911 |
(55,772) |
(11,085) |
|||||
Net increase (decrease) in cash and cash equivalents |
47,297 |
167,820 |
(98,403) |
|||||
Cash and cash equivalents at the beginning of the period |
408,020 |
459,228 |
571,276 |
|||||
Cash and cash equivalents at the end of the period |
$ |
459,228 |
$ |
571,276 |
$ |
461,788 |
||
Supplementary information |
||||||||
Cash paid during the period for interest |
$ |
14,061 |
$ |
30,788 |
$ |
27,175 |
||
Cash paid during the period for income taxes |
$ |
91,825 |
$ |
71,857 |
$ |
83,803 |
||
Property, plant and equipment acquired under capital lease obligation |
$ |
2,699 |
$ |
2,342 |
$ |
2,176 |
Reconciliation of Adjusted Non-GAAP Financial Measures to GAAP Measures
To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following measures defined by the
- Adjusted income from operations;
- Adjusted net income attributable to shareholders of
Genpact Limited , or adjusted net income; and - Adjusted diluted earnings per share attributable to shareholders of
Genpact Limited , or adjusted diluted earnings per share.
These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures, the financial statements prepared in accordance with GAAP and the reconciliations of
Prior to
Additionally,
A limitation of using adjusted income from operations and adjusted net income versus income from operations and net income calculated in accordance with GAAP is that these non-GAAP financial measures exclude a recurring cost, namely stock-based compensation. Management compensates for this limitation by providing specific information on the GAAP amounts excluded from adjusted income from operations and adjusted net income.
The following tables show the reconciliation of these adjusted financial measures from GAAP for the three months and year ended
Reconciliation of Adjusted Income from Operations |
||||||||||||
(Unaudited) |
||||||||||||
(In thousands) |
||||||||||||
Year ended December 31, |
Three months ended December 31, |
|||||||||||
2013 |
2014 |
2013 |
2014 |
|||||||||
Income from operations per GAAP |
$ |
309,527 |
$ |
294,031 |
$ |
71,633 |
$ |
70,866 |
||||
Add: Stock-based compensation |
31,129 |
28,065 |
9,198 |
7,912 |
||||||||
Add: Amortization of acquired intangible assets |
18,321 |
22,233 |
4,685 |
6,347 |
||||||||
Add: Acquisition related expenses |
— |
2,772 |
— |
795 |
||||||||
Add/Less: Other income (expense), net, excluding net interest |
(1,168) |
2,112 |
1,190 |
776 |
||||||||
Add/Less: Gain (loss) on Equity-method investment activity, net |
169 |
(4,795) |
30 |
(4,882) |
||||||||
Less: Net income attributable to noncontrolling interest |
(5,334) |
(169) |
(1,064) |
— |
||||||||
Adjusted income from operations |
$ |
352,644 |
$ |
344,249 |
$ |
85,672 |
$ |
81,814 |
Reconciliation of Adjusted Net Income |
|||||||||||
(Unaudited) |
|||||||||||
(In thousands, except per share data) |
|||||||||||
Year ended December 31, |
Three months ended December 31, |
||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||
Net income attributable to Genpact Limited shareholders per GAAP |
$ |
229,717 |
$ |
192,002 |
$ |
48,842 |
$ |
45,752 |
|||
Add: Stock-based compensation |
31,129 |
28,065 |
9,198 |
7,912 |
|||||||
Add: Amortization of acquired intangible assets |
18,321 |
22,233 |
4,685 |
6,347 |
|||||||
Add: Acquisition related expenses |
— |
2,772 |
— |
795 |
|||||||
Less: Tax impact on stock-based compensation |
(6,913) |
(6,366) |
(1,160) |
(1,160) |
|||||||
Less: Tax impact on amortization of acquired intangibles |
(6,373) |
(7,154) |
(2,085) |
(1,997) |
|||||||
Less: Tax impact on acquisition related expenses |
— |
(184) |
— |
(131) |
|||||||
Adjusted net income |
$ |
265,881 |
$ |
231,368 |
$ |
59,480 |
$ |
57,518 |
|||
Adjusted diluted earnings per share |
$ |
1.13 |
$ |
1.03 |
$ |
0.25 |
$ |
0.26 |
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