Genpact Reports Results for 2013 Full Year and Fourth Quarter
(Logo: http://photos.prnewswire.com/prnh/20120501/NY98560LOGO )
Key Financial Results – Full Year 2013
- Revenues were
$2.132 billion , up 12.1% from$1.902 billion in 2012. - Income from operations was
$309.5 million , up 17.1% from$264.3 million in 2012. - Net income attributable to
Genpact Limited shareholders was$229.7 million , up 28.9% from$178.2 million in 2012. Net income margin for 2013 was 10.8%, up from 9.4% in 2012. - Diluted earnings per common share were
$0.97 , up from$0.78 per share in 2012. - Adjusted income from operations was
$352.6 million , up 12.6% from$313.1 million in 2012. - Adjusted income from operations margin was 16.5%, unchanged from 2012.
- Adjusted diluted earnings per share were
$1.13 , up from$0.96 in 2012. - The effective tax rate was 23.6%, down from 30.6% in 2012.
Key Financial Results – Fourth Quarter 2013
- Revenues were
$558.5 million , up 10.0% from$507.7 million in the fourth quarter of 2012. - Income from operations was
$71.6 million , up 1.2% from$70.8 million in the fourth quarter of 2012. - Net income attributable to
Genpact Limited shareholders was$48.8 million , compared to$53.4 million in the fourth quarter of 2012. Net income margin for the fourth quarter of 2013 was 8.7%, compared to 10.5% in the fourth quarter of 2012. - Diluted earnings per common share were
$0.21 , compared to$0.23 in the fourth quarter of 2012. - Adjusted income from operations was
$85.7 million , up 2.0% from$84.0 million in the fourth quarter of 2012. - Adjusted income from operations margin was 15.3%, compared to 16.5% in the fourth quarter of 2012.
- Adjusted diluted earnings per share were
$0.25 , unchanged from the fourth quarter of 2012.
N.V. 'Tiger' Tyagarajan,
Revenues from Global Clients grew 16.4% for the full year 2013 and 13.3% in the fourth quarter. Business process management revenues from Global Clients grew 15.1% for the full year and 11.8% in the fourth quarter. Growth in revenues from global clients was led by growth in the banking and financial services, insurance, high-tech, consumer packaged goods, retail and life sciences verticals. Revenues from Global Clients represented approximately 77.5% of
In the 12 months ended
Approximately 75.4% of
As of December 31, 2013,
2014 Outlook
Tyagarajan continued, "The fundamentals of our business and our market opportunity have not changed and we continue to believe there is a long runway for growth where our competitive advantages are clear and compelling. In order to ensure that we are the best partner for our clients in their transformational journeys, over a year ago we commenced an extensive study of the market and our capabilities to better understand how to take
"In the near-term, we expect the revenue headwinds we faced in 2013 to continue and, as a result, our revenue guidance for 2014 is
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
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 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 |
|
+1 (646) 624-5951 |
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Media |
Gail Marold +1 (919) 345-3899 |
GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Balance Sheets |
||||||
As of December 31, 2012 |
As of December 31, 2013 |
|||||
Assets |
||||||
Current assets |
||||||
Cash and cash equivalents |
$ |
459,228 |
$ |
571,276 |
||
Accounts receivable, net |
451,960 |
504,714 |
||||
Accounts receivable from related party, net |
29 |
403 |
||||
Short term deposits |
18,292 |
- |
||||
Deferred tax assets |
48,489 |
60,638 |
||||
Prepaid expenses and other current assets |
150,769 |
139,113 |
||||
Total current assets |
$ |
1,128,767 |
$ |
1,276,144 |
||
Property, plant and equipment, net |
200,362 |
173,204 |
||||
Deferred tax assets |
91,383 |
89,305 |
||||
Investment in equity affiliates |
416 |
384 |
||||
Customer-related intangible assets, net |
84,748 |
75,105 |
||||
Marketing-related intangible assets, net |
21,585 |
17,374 |
||||
Other intangible assets, net |
6,054 |
6,637 |
||||
Goodwill |
956,064 |
953,849 |
||||
Other assets |
116,548 |
97,365 |
||||
Total assets |
$ |
2,605,927 |
$ |
2,689,367 |
GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Balance Sheets |
||||||
As of December 31, 2012 |
As of December 31, 2013 |
|||||
Liabilities and equity |
||||||
Current liabilities |
||||||
Short-term borrowings |
$ |
80,000 |
$ |
- |
||
Current portion of long-term debt |
4,982 |
4,263 |
||||
Current portion of capital lease obligations |
1,301 |
1,405 |
||||
Accounts payable |
18,652 |
18,412 |
||||
Income taxes payable |
22,304 |
15,007 |
||||
Deferred tax liabilities |
538 |
614 |
||||
Accrued expenses and other current liabilities |
390,041 |
421,992 |
||||
Total current liabilities |
$ |
517,818 |
$ |
461,693 |
||
Long-term debt, less current portion |
656,879 |
653,601 |
||||
Capital lease obligations, less current portion |
2,533 |
2,657 |
||||
Deferred tax liabilities |
6,068 |
4,464 |
||||
Other liabilities |
250,848 |
242,884 |
||||
Total liabilities |
$ |
1,434,146 |
$ |
1,365,299 |
||
Shareholders' equity |
||||||
Preferred shares, $0.01 par value, 250,000,000 authorized, none issued |
- |
- |
||||
Common shares, $0.01 par value, 500,000,000 authorized, |
2,253 |
2,310 |
||||
Additional paid-in capital |
1,202,448 |
1,268,344 |
||||
Retained earnings |
281,982 |
511,699 |
||||
Accumulated other comprehensive income (loss) |
(318,272) |
(459,614) |
||||
Genpact Limited shareholders' equity |
$ |
1,168,411 |
$ |
1,322,739 |
||
Noncontrolling interest |
3,370 |
1,329 |
||||
Total equity |
$ |
1,171,781 |
$ |
1,324,068 |
||
Total liabilities and equity |
$ |
2,605,927 |
$ |
2,689,367 |
GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Income |
||||||||
Year Ended December 31, |
||||||||
2011 |
2012 |
2013 |
||||||
Net revenues |
||||||||
Net revenues from services – others |
$ |
1,115,972 |
$ |
1,901,421 |
$ |
2,131,059 |
||
Net revenues from services - related party |
484,464 |
550 |
938 |
|||||
Total net revenues |
1,600,436 |
1,901,971 |
2,131,997 |
|||||
Cost of revenue |
||||||||
Services |
1,004,899 |
1,157,766 |
1,319,571 |
|||||
Total cost of revenue |
1,004,899 |
1,157,766 |
1,319,571 |
|||||
Gross profit |
$ |
595,537 |
$ |
744,205 |
$ |
812,426 |
||
Operating expenses: |
||||||||
Selling, general and administrative expenses |
357,959 |
456,611 |
484,810 |
|||||
Amortization of acquired intangible assets |
19,974 |
23,233 |
23,645 |
|||||
Other operating (income) expense, net |
1,360 |
16 |
(5,556) |
|||||
Income from operations |
$ |
216,244 |
$ |
264,345 |
$ |
309,527 |
||
Foreign exchange (gains) losses, net |
(35,099) |
(13,146) |
(20,763) |
|||||
Other income (expense), net |
10,716 |
(14,499) |
(24,308) |
|||||
Income before Equity-method investment activity, net and income tax expense |
$ |
262,059 |
$ |
262,992 |
$ |
305,982 |
||
Equity-method investment activity, net |
327 |
(17) |
(169) |
|||||
Income before income tax expense |
$ |
261,732 |
$ |
263,009 |
$ |
306,151 |
||
Income tax expense |
70,656 |
78,419 |
71,100 |
|||||
Net Income |
$ |
191,076 |
$ |
184,590 |
$ |
235,051 |
||
Net income attributable to noncontrolling interest |
6,782 |
6,374 |
5,334 |
|||||
Net income attributable to Genpact Limited shareholders |
$ |
184,294 |
$ |
178,216 |
$ |
229,717 |
||
Net income available to Genpact Limited common shareholders |
$ |
184,294 |
$ |
178,216 |
$ |
229,717 |
||
Earnings per common share attributable to Genpact Limited common shareholders |
||||||||
Basic |
$ |
0.83 |
$ |
0.80 |
$ |
1.00 |
||
Diluted |
$ |
0.81 |
$ |
0.78 |
$ |
0.97 |
||
Weighted average number of common shares used in computing earnings per common share attributable to Genpact Limited common shareholders |
||||||||
Basic |
221,567,502 |
223,696,567 |
229,348,411 |
|||||
Diluted |
226,354,403 |
229,532,516 |
235,754,267 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
||||||||
Year Ended December 31, |
||||||||
2011 |
2012 |
2013 |
||||||
Operating activities |
||||||||
Net income attributable to Genpact Limited shareholders |
$ |
184,294 |
$ |
178,216 |
$ |
229,717 |
||
Net income attributable to noncontrolling interest |
6,782 |
6,374 |
5,334 |
|||||
Net income |
$ |
191,076 |
$ |
184,590 |
$ |
235,051 |
||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
||||||||
Depreciation and amortization |
58,357 |
56,089 |
52,815 |
|||||
Amortization of debt issue costs (including loss on extinguishment of debt) |
1,952 |
8,079 |
6,035 |
|||||
Amortization of acquired intangible assets |
20,132 |
23,305 |
23,645 |
|||||
Reserve for doubtful receivables |
6,298 |
3,878 |
11,420 |
|||||
Reserve for mortgage loans |
52 |
108 |
- |
|||||
Unrealized (gain) loss on revaluation of foreign currency asset/liability |
(18,276) |
(13,700) |
(6,251) |
|||||
Equity-method investment activity, net |
327 |
(17) |
(169) |
|||||
Stock-based compensation expense |
27,767 |
32,152 |
31,129 |
|||||
Deferred income taxes |
(7,981) |
(10,028) |
(1,116) |
|||||
Others, net |
5,322 |
6,471 |
5,939 |
|||||
Change in operating assets and liabilities: |
||||||||
Increase in accounts receivable |
(46,314) |
(36,171) |
(60,817) |
|||||
Increase in other assets |
(10,461) |
(20,525) |
9,377 |
|||||
Increase (Decrease) in accounts payable |
6,800 |
(4,380) |
1,785 |
|||||
Increase (Decrease) in accrued expenses and other current liabilities |
27,517 |
38,478 |
21,359 |
|||||
Increase (Decrease) in income taxes payable |
10,345 |
1,775 |
(6,555) |
|||||
Increase (Decrease) in other liabilities |
(6,301) |
40,556 |
(12,043) |
|||||
Net cash provided by operating activities |
$ |
266,612 |
$ |
310,660 |
$ |
311,604 |
||
Investing activities |
||||||||
Purchase of property, plant and equipment |
(35,776) |
(83,337) |
(48,879) |
|||||
Proceeds from sale of property, plant and equipment |
916 |
500 |
3,442 |
|||||
Investment in affiliates |
- |
(205) |
- |
|||||
Purchase of short term investments |
(129,458) |
- |
- |
|||||
Proceeds from sale of short term investments |
206,443 |
- |
- |
|||||
Short term deposits placed |
- |
(43,978) |
(55,001) |
|||||
Redemption of short term deposits |
- |
25,638 |
69,249 |
|||||
Payment for business acquisitions, net of cash acquired |
(577,233) |
(55,901) |
(49,235) |
|||||
Proceeds from divestiture of business, net of cash divested |
- |
- |
1,982 |
|||||
Net cash used for investing activities |
$ |
(535,108) |
$ |
(157,283) |
$ |
(78,442) |
||
Financing activities |
||||||||
Repayment of capital lease obligations |
(2,821) |
(2,279) |
(1,803) |
|||||
Proceeds from long-term debt |
120,000 |
675,000 |
121,410 |
|||||
Repayment of long-term debt |
(40,000) |
(106,688) |
(123,098) |
|||||
Proceeds from Short-term borrowings |
260,000 |
80,000 |
275,000 |
|||||
Repayment of Short-term borrowings |
(8,000) |
(253,004) |
(355,000) |
|||||
Proceeds from issuance of common shares under stock-based compensation plans |
12,840 |
26,227 |
45,859 |
|||||
Payment for net settlement of stock-based awards |
- |
(2,103) |
(9,315) |
|||||
Payment of earn-out consideration |
- |
(587) |
(3,868) |
|||||
Cost incurred in relation to Debt amendment and refinancing |
(9,115) |
(15,266) |
(8,104) |
|||||
Distribution to noncontrolling interest |
(6,805) |
(5,760) |
(6,423) |
|||||
Dividend paid |
- |
(501,620) |
- |
|||||
Net cash used for financing activities |
$ |
326,099 |
$ |
(106,080) |
$ |
(65,342) |
||
Effect of exchange rate changes |
(53,617) |
3,911 |
(55,772) |
|||||
Net increase (decrease) in cash and cash equivalents |
57,603 |
47,297 |
167,820 |
|||||
Cash and cash equivalents at the beginning of the period |
404,034 |
408,020 |
459,228 |
|||||
Cash and cash equivalents at the end of the period |
$ |
408,020 |
$ |
459,228 |
$ |
571,276 |
||
Supplementary information |
||||||||
Cash paid during the period for interest |
$ |
5,026 |
$ |
14,061 |
$ |
30,788 |
||
Cash paid during the period for income taxes |
$ |
65,688 |
$ |
91,825 |
$ |
71,857 |
||
Property, plant and equipment acquired under capital lease obligation |
$ |
1,787 |
$ |
2,699 |
$ |
2,342 |
GENPACT LIMITED AND ITS SUBSIDIARIES |
||||||||
Three months ended |
||||||||
March 31, 2012 |
June 30, 2012 |
September 30, 2012 |
December 31, 2012 |
|||||
(dollars in millions) |
||||||||
Statement of income data |
||||||||
Total net revenues |
$ 435.5 |
$ 467.6 |
$ 491.2 |
$ 507.7 |
||||
Cost of Revenue |
265.5 |
285.2 |
297.3 |
309.8 |
||||
Gross profit |
170.0 |
182.4 |
193.9 |
197.9 |
||||
Income from operations |
60.4 |
63.2 |
70.0 |
70.8 |
||||
Income before Equity method investment activity, net and income tax expense |
56.6 |
84.4 |
41.8 |
80.1 |
||||
Net income attributable to Genpact Limited common shareholders |
$ 38.5 |
$ 61.1 |
$ 25.2 |
$ 53.4 |
Three months ended |
||||||||
March 31, 2013 |
June 30, 2013 |
September 30, 2013 |
December 31, 2013 |
|||||
(dollars in millions) |
||||||||
Statement of income data |
||||||||
Total net revenues |
$ 503.8 |
$ 534.8 |
$ 534.9 |
$ 558.5 |
||||
Cost of Revenue |
311.7 |
332.7 |
329.3 |
345.8 |
||||
Gross profit |
192.1 |
202.1 |
205.6 |
212.6 |
||||
Income from operations |
73.9 |
78.0 |
86.0 |
71.6 |
||||
Income before Equity method investment activity, net and income tax expense |
65.5 |
84.6 |
93.3 |
62.6 |
||||
Net income attributable to Genpact Limited common shareholders |
$ 46.7 |
$ 63.9 |
$ 70.3 |
$ 48.8 |
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 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 measures used by other companies. In addition, these non-GAAP 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 |
|||||||||||
Year Ended December 31,
|
Quarter Ended December 31,
|
||||||||||
2012 |
2013 |
2012 |
2013 |
||||||||
Income from operations per GAAP |
$ |
264,345 |
$ |
309,527 |
$ |
70,795 |
$ |
71,633 |
|||
Add: Amortization of acquired intangible assets resulting from Formation Accounting |
6,845 |
2,961 |
1,592 |
679 |
|||||||
Add: Amortization of acquired intangible assets relating to acquisitions |
10,739 |
15,360 |
2,791 |
4,006 |
|||||||
Add: Acquisition related expenses |
298 |
- |
- |
- |
|||||||
Add: Consultancy, legal and banker fees relating to change of shareholding (excluding expenses related to the credit facility), as recorded under other income (expense) |
17,227 |
- |
10,620 |
- |
|||||||
Less: Recovery from selling shareholder of consultancy, legal and banker fees relating to change of shareholding (excluding expenses related to the new credit facility), as recorded under other income (expense) |
(17,000) |
- |
(17,000) |
- |
|||||||
Add: Consultancy, legal and banker fees relating to capital restructuring (excluding expenses related to the new credit facility), as recorded under selling, general and administrative expenses |
3,237 |
- |
39 |
- |
|||||||
Add: Stock-based compensation |
32,152 |
31,129 |
9,296 |
9,198 |
|||||||
Less: Provision (created) reversed for loss on divestitures |
(459) |
(3,487) |
(459) |
33 |
|||||||
Add: Other income (expense) |
2,074 |
2,319 |
7,807 |
1,157 |
|||||||
Add: Gain (Loss) on Equity-method investment activity, net |
17 |
169 |
(7) |
30 |
|||||||
Less: Net income attributable to noncontrolling interest |
(6,374) |
(5,334) |
(1,523) |
(1,064) |
|||||||
Adjusted income from operations |
$ |
313,101 |
$ |
352,644 |
$ |
83,951 |
$ |
85,672 |
Reconciliation of Adjusted Net Income |
|||||||||
Year Ended December 31, |
Quarter Ended December 31, |
||||||||
2012 |
2013 |
2012 |
2013 |
||||||
Net income per GAAP |
$ |
178,216 |
$ |
229,717 |
$ |
53,401 |
$ |
48,842 |
|
Add: Amortization of acquired intangible assets resulting from Formation Accounting |
6,845 |
2,961 |
1,592 |
679 |
|||||
Add: Amortization of acquired intangible assets relating to acquisitions |
10,739 |
15,360 |
2,791 |
4,006 |
|||||
Add: Consultancy, legal and banker fees relating to change of shareholding (excluding expenses related to the credit facility), as recorded under other income (expense) |
17,227 |
- |
10,620 |
- |
|||||
Less: Recovery from selling shareholder of consultancy, legal and banker fees relating to change of shareholding (excluding expenses related to the new credit facility), as recorded under other income (expense) |
(17,000) |
- |
(17,000) |
- |
|||||
Add: Consultancy, legal and banker fees relating to capital restructuring (excluding expenses related to the new credit facility), as recorded under selling, general and administrative expenses |
3,237 |
- |
39 |
- |
|||||
Add: Withholding taxes relating to remittance of funds between subsidiaries to partly fund the payment of special cash dividend in respect of capital restructuring |
2,300 |
- |
- |
- |
|||||
Add: Stock-based compensation |
32,152 |
31,129 |
9,296 |
9,198 |
|||||
Add: Acquisition related expenses |
298 |
- |
- |
- |
|||||
Less: Tax impact on amortization of acquired intangibles resulting from Formation Accounting |
(1,564) |
(551) |
(374) |
(138) |
|||||
Less: Tax impact on amortization of acquired intangibles relating to acquisitions |
(3,650) |
(5,822) |
(971) |
(1,947) |
|||||
Less: Tax impact on consultancy and legal fees relating to capital restructuring (excluding expenses related to the new credit facility) |
(194) |
- |
(12) |
- |
|||||
Less: Tax Impact on stock-based compensation |
(8,032) |
(6,913) |
(1,028) |
(1,160) |
|||||
Less: Tax Impact on acquisition related expenses |
(75) |
- |
- |
- |
|||||
Adjusted net income |
$ |
220,499 |
$ |
265,881 |
$ |
58,354 |
$ |
59,480 |
|
Adjusted diluted earnings per share |
$ |
0.96 |
$ |
1.13 |
0.25 |
0.25 |
SOURCE