UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 5, 2016

 

GENPACT LIMITED

(Exact name of registrant as specified in its charter)

 

 

Canon's Court, 22 Victoria Street

Hamilton HM 12, Bermuda

(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (441) 295-2244

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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On May 5, 2016, Genpact Limited (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2016.  The Company is furnishing this Form 8-K pursuant to Item 2.02, “Results of Operations and Financial Condition.” A copy of the press release, attached hereto as Exhibit 99.1, and a slide presentation to be presented during the conference call to discuss the Company’s financial results for the three months ended March 31, 2016, attached hereto as Exhibit 99.2, are incorporated herein by reference.

The information in this report (including Exhibits 99.1 and 99.2) is being furnished pursuant to Item 2.02 and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

The Company is making reference to non-GAAP financial information in the press release and slide presentation and on the conference call.  A reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release and slide presentation.

(d) Exhibits:

 

 

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

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EXHIBIT INDEX

 

 

 

Exhibit 99.1

Genpact Reports Results for the First Quarter of 2016

Revenues of $610 Million, Up 4% (~6% on a constant currency basis)

Global Client BPO Revenues of $406 Million, Up 9% (~12% on a constant currency basis)

Adjusted Diluted EPS of $0.31, Up 30%

NEW YORK, May 5, 2016 — Genpact Limited (NYSE: G), a global leader in digitally-powered business process management and services, today announced financial results for the first quarter ended March 31, 2016.

Key Financial Results – First Quarter 2016

“We delivered solid first quarter results, driven by continued strong momentum in our core Global Client BPO business in a challenging global economy,” said N.V. “Tiger” Tyagarajan, Genpact’s president and CEO. “I believe we are in a better position today than we have ever been to meet the transformational needs of our clients, particularly in a world that is changing at a rapid pace. Our highly differentiated Lean Digital^SM approach, which delivers the full power of digital focused on mid and back office operations, is resonating in the marketplace as we are being invited to more and more CXO-led transformation conversations.  In addition, we believe Lean Digital^SM is expanding our addressable market in our chosen verticals, service lines and geographic markets, and enabling faster and greater client penetration than previously possible.”

Revenue Details – First Quarter 2016

During the first quarter ended March 31, 2016, GE divested certain businesses that Genpact continues to serve. Historically we have reclassified revenues from these divested GE businesses as Global Client revenues in each fiscal quarter beginning on the date of divestiture. However, we will now reclassify such revenue as Global Client revenue only at the end of each fiscal year. We believe that this change allows us to provide a more consistent view of the trends underlying our Global Client and GE businesses. If we had reclassified the revenue from such GE-divested businesses during the first quarter, Global Client revenues for the quarter ended March 31, 2016 would have been $513 million and GE revenues would have been $96 million.

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Cash Flow from Operations

Other Metrics as of March 31, 2016

2016 Outlook

Genpact expects:

Conference Call to Discuss Financial Results

Genpact’s management will host an hour-long conference call beginning at 8:00 a.m. ET on May 5, 2016 to discuss the company’s performance for the first quarter of 2016. To participate, callers can dial +1 (877) 654-0173 from within the U.S. or +1 (281) 973-6289 from any other country. Thereafter, callers will be prompted to enter the participant code, 81979254.

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 Genpact website after the end of the call. A transcript of the call as well as the presentation slides will also be made available on the website.

About Genpact

Genpact (NYSE: G) stands for “generating business impact.”  We are a global leader in digitally-powered business process management and services. We architect the Lean Digital^SM enterprise through our patented Smart Enterprise Processes (SEP^SM) framework that reimagines our clients’ operating models end-to-end, including the middle and back offices.  This creates Intelligent Operations^SM that we help design, transform, and run. The impact on our clients is a high return on transformation investments through growth, efficiency, and business agility.  For two decades, first as a General Electric division and later as an independent company, we have been passionately serving our clients. Today, we generate impact for a few hundred strategic clients, including approximately one-fifth of the Fortune Global 500, and have grown to over 70,000 people in 25 countries, with key offices in New York City. The resulting business process and industry domain expertise and experience running complex operations are a unique heritage and focus that help us drive the best choices across technology, analytics, and organizational design. For additional information, visit www.genpact.com.

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 outsourcing 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, foreign currency fluctuations, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact's Annual Report on Form 10-K. These filings are available at www.sec.gov. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange

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Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management's current analysis of future events and should not be relied upon as representing management's expectations or beliefs as of any date subsequent to the time they are made. Genpact undertakes no obligation to update any forward-looking statements that may be made from time to time by or on behalf of Genpact.

Contacts

 

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GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share data and share count)

 

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GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data and share count)

 

 

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GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

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Reconciliation of 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 Securities and Exchange Commission as non-GAAP financial measures:

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. Accordingly, these non-GAAP financial measures, the financial statements prepared in accordance with GAAP and the reconciliations of Genpact’s GAAP financial statements to such non-GAAP financial measures should be carefully evaluated.

Prior to July 2012, Genpact’s management used financial statements that excluded significant acquisition-related expenses, amortization of related acquired intangibles, and amortization of acquired intangibles at the company’s formation in 2004 for its internal management reporting, budgeting and decision making purposes, including comparing Genpact’s operating results to that of its competitors. However, considering Genpact’s frequent acquisitions of varying scale and size, and the difficulty in predicting expenses relating to acquisitions and the amortization of acquired intangibles thereof, since July 2012 Genpact’s management has used financial statements that exclude all acquisition-related expenses and amortization of acquired intangibles for its internal management reporting, budgeting and decision making purposes, including comparing Genpact’s operating results to that of its competitors. Acquisition-related expenses are excluded in the period in which an acquisition is consummated.

Additionally, Genpact’s management uses financial statements that exclude stock-based compensation expense. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting ASC 718 “Compensation-Stock Compensation,” Genpact’s management believes that providing non-GAAP financial measures that exclude such expenses allows investors to make additional comparisons between Genpact’s operating results and those of other companies. Genpact also believes that it is unreasonably difficult to provide its financial outlook in accordance with GAAP for a number of reasons, including, without limitation, its inability to predict its stock-based compensation expense under ASC 718, the amortization of intangibles associated with further acquisitions and acquisition-related expenses. Accordingly, Genpact believes that the presentation of adjusted income from operations and adjusted net income, when read in conjunction with the Company’s reported results, can provide useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations.

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.

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The following tables show the reconciliation of these adjusted financial measures from GAAP for the three months ended March 31, 2015 and 2016:

Reconciliation of Adjusted Income from Operations

(Unaudited)

(In thousands)

 

Reconciliation of Adjusted Net Income

(Unaudited)

(In thousands, except per share data)

 

 

Genpact Q1 2016 Earnings Presentation May 5, 2016 Ticker (NYSE: G) Exhibit 99.2

Forward-looking Statements These materials contain 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 outsourcing 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, foreign currency fluctuations, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact’s Annual Report on Form 10-K. These filings are available at www.sec.gov or on the Investor Relations section of our website, www.genpact.com. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management’s current analysis of future events and should not be relied upon as representing management’s expectations or beliefs as of any date subsequent to the time they are made. Genpact undertakes no obligation to update any forward-looking statements that may be made from time to time by or on behalf of Genpact. Non-GAAP Financial Measures These materials also include measures defined by the SEC as non-GAAP financial measures. Genpact believes that these non-GAAP measures can provide useful supplemental information to investors regarding financial and business trends relating to its financial condition and results of operations when read in conjunction with the Company’s reported results. Reconciliations of these non-GAAP measures from GAAP are available in this presentation and in our earnings release dated May 5, 2016.

Q1 2016 – Key Financial Highlights Solid Quarter Led By Global Client BPO Revenue Q1 ‘16 versus Q1 ‘15 performance: Total revenue: +4% (~ +6% on constant currency basis) Global Clients revenue: +6% (~ +9% on constant currency basis) Global Client BPO revenue +9% (~ +12% on constant currency basis) GE revenue: -5% (~ -5% on constant currency basis) Adjusted income from operations grew 2%, with a margin(1) of 14.0% Adjusted diluted earnings per share grew 30% YoY to $0.31 Global Client growth was broad-based across most of our target verticals and service lines: CPG, BFS, Insurance and High Tech verticals all grew at double digit rates From a service line perspective, Global Client growth was led by Core Industry Vertical Operations, Consulting, Finance & Accounting and Analytics Notes: Adjusted income from operations is a non-GAAP measure. Q1 ‘16 GAAP income from operations margin was 12.4%.

Our Unique and Highly Differentiated Lean DigitalSM Approach Resonating in the Marketplace Lean DigitalSM combines our deep domain and process expertise with digital technologies and design thinking to completely reimagine clients’ operating models: Expands our addressable market and enables a faster and greater level of client penetration Client discussions increasingly focusing on our Lean DigitalSM approach We are investing to support Lean DigitalSM: 300+ certified Lean Digital experts to date, targeting ~1,000 team members to be certified by year-end; and 40 Lean DigitalSM assets currently deployed and incorporated into our solutions, and we are on path to create ~100 by year-end

Our Pipeline Continues to Grow We continued to convert and win big deals as we signed another large transformational engagement during the first quarter Our pipeline continues to grow across our targeted industry verticals with inflows up Win rates continue to hold at high levels Investments in client-facing teams and capabilities driving traction for Lean DigitalSM transformation solutions

Total revenue growth at 4% (~6% on a constant currency basis) Q1 2016 Global Client revenue grew 6% (~9% on a constant currency basis) Global Client BPO revenues increased 9% (~12% on a constant currency basis) and Global Client ITO revenues declined 5% Global Clients GE BPO ITO 4% YoY Growth% 6% (5)% 4% (4)% 6% YoY Growth% Q1 ‘15 Q1 ‘16 Q1 ‘15 Q1 ‘16 ($ in millions) ($ in millions) $587 $610 $610 $587 Q1 2016 Revenue Summary

Number of clients Notes: Relationship size = annual Genpact revenues from client relationships based on last four rolling quarters. Relationship Size(1) Continue to Expand Client Relationships

Q1‘15 Q1’16                     YoY Revenue $587.2 $609.7 3.8% Cost of Revenue 357.5 372.8 4.3% Gross Profit 229.7 236.9 3.1% Gross Profit % of Revenue 39.1% 38.8% -30 bps SG&A $148.7 $160.1 7.7% SG&A % of Revenue 25.3% 26.3% 100 bps Adjusted Income from Operations(1) $83.9 $85.4 1.8% Adjusted Income from Operations Margin 14.3% 14.0% -30 bps ($ in millions) Notes: Adjusted income from operations is a non-GAAP measure. Income from operations was $74.1 million in Q1 ‘15 and $75.6 million in Q1 ’16. Q1 Adjusted Income from Operations Results Reflect Planned Investments

EPS Year-over-Year Bridge Q1 ‘15 Q1 ‘16 Adjusted Net Income ($ millions)52.9 66.2 Diluted Shares Outstanding (millions)(3) 222.3 213.9 20 2 Lower FX Re-measurement losses in Q1’16 vs. Q1’15 Q1 ‘15 GAAP EPS 27 (Cents per share) Net Adjustments(1) 24 4 Net Adjustments(1) Q1 ‘15 Adjusted EPS Q1 ‘16 Adjusted EPS Q1 ‘15 GAAP EPS Lower Interest Expense 4 Increase Decrease Notes: Adjustments primarily include amortization of acquired intangible assets, acquisition-related expenses and stock-based compensation expenses. Net of shares issued, retired and dilution impact. Weighted average number of diluted shares outstanding. This includes the impact of 1.4 million shares repurchased in Q1’ 2016. - The above bridge reflects only significant variance items year-over-year and is illustrative and subject to rounding. - EPS = Diluted earnings per share 31 2 Lower ETR 1 Higher Adjusted Income from Operations Net Share Repurchase(2) 1 1

Q1 2016 cash from operations down $36 million mainly due to timing events impacting working capital and certain tax payments Q1 ‘15 Q1 ‘16 Notes: 1) Cash and Liquid Assets = Cash and cash equivalents and short-term deposits. ($ in millions) Q1 ’15 Q4’15 Q1 ‘16 Days Sales Outstanding81 82 89 Cash and Liquid Assets ($ millions)(1) 434 451 430 Cash from Operations 24 (12)

FY 2016 Revenues ($B) 2.62 – 2.66 Adjusted Income from Operations - Margin ~15.5% Adjusted Earnings Per Share(1) $1.40 - $1.42 Other Metrics Cash Flow from Operations (YoY Growth) 6% - 8% Effective Tax Rate 20% - 21% Capital Expenditure (% of revenue) ~3.0% Full Year 2016 Outlook Notes: Adjusted EPS estimate assumes: weighted average shares outstanding of approximately 214.2 million; $1 million adverse impact of balance sheet related foreign exchange gains or losses; and 2016 effective tax rate of 20 – 21%.

Annexure 1: Reconciliation of Adjusted Income from Operations – Q1 2016 (USD, in thousands) Quarter ended March 31, 2015   2016 Income from operations per GAAP $ 74,050 $ 75,622 Add: Stock-based compensation 4,660 5,336 Add: Amortization of acquired intangible assets(1) 6,112 5,238 Add: Acquisition-related expenses 798 164 Add: Other income (expense), net 458 878 Add/Less: Loss on equity-method investment activity, net (2,223) (2,145) Add: Net loss attributable to noncontrolling interest - 289 Adjusted income from operations $ 83,855 $ 85,382 Notes: Prior to July 2012, amortization expenses of acquired intangibles of significant acquisitions were excluded in the computation of adjusted income from operations. Since July 2012, amortization expenses of acquired intangibles of all acquisitions are excluded in such computation.

Annexure 2: Reconciliation of Adjusted Net Income – Q1 2016 (USD, in thousands, except per share data) Quarter ended March 31, 2015   2016 Net income attributable to Genpact Limited shareholders per GAAP $ 44,653   $ 58,565 Add: Stock-based compensation 4,660 5,336 Add: Amortization of acquired intangible assets(1) 6,112 5,238 Add: Acquisition-related expenses 798 164 Less: Tax impact on stock-based compensation (1,153) (1,336) Less: Tax impact on amortization of acquired intangibles (1,910) (1,660) Less: Tax impact on acquisition related expenses (229) (59) Adjusted net income $ 52,931 $ 66,248 Adjusted diluted earnings per share $ 0.24 $ 0.31 Notes: Prior to July 2012, amortization expenses of acquired intangibles of significant acquisitions were excluded in the computation of adjusted income from operations. Since July 2012, amortization expenses of acquired intangibles of all acquisitions are excluded in such computation.

Thank you