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Exhibit 99.1

 

LOGO

Genpact Reports Results for the First Quarter of 2015

Revenues of $587.2 Million, Up 11.2%

Adjusted Income from Operations of $83.9 Million

Cash Flow from Operations of $24.3 Million

NEW YORK, April 30, 2015 — Genpact Limited (NYSE: G), a global leader in designing, transforming and running intelligent business operations, today announced financial results for the first quarter ended March 31, 2015.

Key Financial Results – First Quarter 2015

 

  Revenues were $587.2 million, up 11.2% from $528.2 million in the first quarter of 2014.

 

  Income from operations was $74.1 million, compared to $77.2 million in the first quarter of 2014.

 

  Adjusted income from operations was $83.9 million with a margin of 14.3%, compared to $86.4 million with a margin of 16.4% in the first quarter of 2014.

 

  Net income attributable to Genpact Limited shareholders was $44.7 million, compared to $50.6 million in the first quarter of 2014.

 

  Diluted earnings per common share were $0.20, compared to $0.21 in the first quarter of 2014.

 

  Adjusted diluted earnings per share were $0.24, unchanged from the first quarter of 2014.

N.V. ‘Tiger’ Tyagarajan, Genpact’s president and CEO, said, “We are pleased with our first quarter results and excited by the momentum in our business. Our Global Client growth rate accelerated to over 13% in the quarter. We signed two large, transformational engagements in the first quarter and our pipeline continues to be healthy across our target industry verticals, service lines, and geographies. We believe we have the right strategy, with the right areas of focus, to increase our market share and drive growth in our under-penetrated markets.”

Revenues from Global Clients represented approximately 80.7% of Genpact’s total revenues, or $473.5 million, with the remaining approximately 19.3% of revenues, or $113.6 million, coming from GE. Revenues from Global Clients grew 13.3% over the first quarter of 2014, led by growth in the consumer product goods, insurance, life sciences, high tech, and banking verticals. Within Global Clients, BPO revenues grew by 19.1%. GE revenues increased 3.1% from the first quarter of 2014.

In the 12 months ending March 31, 2015, Genpact grew the number of client relationships with annual revenues over $5 million to 94 from 81 as of March 31, 2014. This includes client relationships with more than $15 million in annual revenue increasing to 30 from 26, client relationships with more than $25 million in annual revenue increasing to 17 from 13, and client relationships with more than $50 million in annual revenue increasing to 4 from 3.

78.5% of Genpact’s revenues for the quarter came from BPO services, up from 75.3% in the first quarter of 2014. Revenues from IT services were 21.5% of total revenues for the quarter, compared to 24.7% in the first quarter of 2014.

Genpact generated $24.3 million of cash from operations in the quarter, up from $14.2 million in the first quarter of 2014. Genpact had approximately $434 million in cash and cash equivalents as of March 31, 2015.


As of March 31, 2015, Genpact had approximately 68,700 employees worldwide, up from approximately 64,900 as of March 31, 2014. Genpact’s employee attrition rate for the quarter was approximately 28%, measured from the first day of employment, compared to 22% for the same period in 2014. Annualized revenue per employee for the quarter was $35,600, up from $33,800 in the first quarter of 2014.

During the first quarter, Genpact repurchased approximately 600,000 of its common shares at a weighted average price of $22.51 for a total of $13.3 million under the share repurchase program it announced on February 27, 2015. Genpact is authorized to repurchase up to $250 million in value of its common shares under the program.

2015 Outlook

Tyagarajan continued, “In today’s rapidly changing world, our value proposition, built on our deep understanding of our clients’ domains and processes, is resonating and more relevant than ever. This is allowing us to combine advanced technologies, data science and analytics together with design and consulting in a meaningful way to add value to our clients. We continue to expect revenues for 2015 to be in the range of $2.46 to $2.50 billion, including an unchanged outlook on Global Client and GE revenues, and adjusted operating margin to be approximately 15.0% as margins improve throughout the year with continued revenue growth and operating leverage.”

Conference Call to Discuss Financial Results

Genpact management will host an hour-long conference call beginning at 4:30 p.m. ET on April 30, 2015 to discuss the company’s performance for the first quarter of 2015. To participate, callers can dial +1 (866) 700-6067 from within the U.S. or +1 (617) 213-8834 from any other country. Thereafter, callers will be prompted to enter the participant code, 67603182.

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 design, transform, and run intelligent business operations including those that are complex and specific to a set of chosen industries. The result is advanced operating models that assist our clients in becoming more competitive by supporting their growth and managing cost, risk, and compliance across a range of functions such as finance and procurement, financial services account servicing, claims management, regulatory affairs, and industrial asset optimization. Our Smart Enterprise Processes (SEPSM) proprietary framework helps companies reimagine how they operate by integrating effective Systems of EngagementTM, core IT, and Data-to-Action AnalyticsSM. Our hundreds of long-term clients include more than one-fourth of the Fortune Global 500. We have grown to over 68,000 people in 25 countries, with key management and a corporate office in New York City. Our global critical mass doesn’t dilute our flexible and collaborative approach, and our management team still drives client partnerships personally. We believe we are able to generate impact quickly because of our business domain expertise and experience running complex operations, driving our focus on what works and making transformation sustainable. Clients attribute much of our success to our unique history: behind our passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 16 years. 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, 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 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.


Contact

 

Investors Bharani Bobba
+1 (203) 300-9230
bharani.bobba@genpact.com
Media

Gail Marold

+1 (919) 345-3899

gail.marold@genpact.com


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

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

 

     As of December 31,
2014
     As of March 31,
2015
 

Assets

     

Current assets

     

Cash and cash equivalents

   $ 461,788       $ 434,310   

Accounts receivable, net

     525,754         529,618   

Deferred tax assets

     45,486         35,958   

Prepaid expenses and other current assets

     155,480         180,918   
  

 

 

    

 

 

 

Total current assets

$  1,188,508    $  1,180,804   

Property, plant and equipment, net

  175,936      173,576   

Deferred tax assets

  59,135      59,125   

Investment in equity affiliates

  494      3,050   

Intangible assets, net

  114,544      117,286   

Goodwill

  1,057,214      1,052,498   

Other assets

  146,706      149,930   
  

 

 

    

 

 

 

Total assets

$ 2,742,537    $ 2,736,269   
  

 

 

    

 

 

 


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

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

 

     As of December 31,
2014
    As of March 31,
2015
 

Liabilities and equity

    

Current liabilities

    

Short-term borrowings

   $ 135,000      $ 135,000   

Current portion of long-term debt

     4,288        4,287   

Current portion of capital lease obligations

     1,443        1,423   

Accounts payable

     15,544        20,416   

Income taxes payable

     13,586        25,671   

Deferred tax liabilities

     1,239        1,395   

Accrued expenses and other current liabilities

     451,014        376,527   
  

 

 

   

 

 

 

Total current liabilities

$ 622,114    $ 564,719   

Long-term debt, less current portion

  649,314      648,235   

Capital lease obligations, less current portion

  2,660      2,555   

Deferred tax liabilities

  6,671      5,973   

Other liabilities

  176,642      176,262   
  

 

 

   

 

 

 

Total liabilities

$  1,457,401    $  1,397,744   
  

 

 

   

 

 

 

Shareholders’ equity

Preferred shares, $0.01 par value, 250,000,000 authorized, none issued

  —        —     

Common shares, $0.01 par value, 500,000,000 authorized, 218,684,205 and 219,697,679 issued and outstanding as of December 31, 2014 and March 31, 2015, respectively

  2,184      2,194  

Additional paid-in capital

  1,296,730      1,307,820   

Retained earnings

  398,706      430,055   

Accumulated other comprehensive income (loss)

  (412,484   (401,544
  

 

 

   

 

 

 

Genpact Limited shareholders’ equity

$ 1,285,136    $ 1,338,525   

Noncontrolling interest

  —        —     
  

 

 

   

 

 

 

Total equity

$ 1,285,136    $ 1,338,525   
  

 

 

   

 

 

 

Total liabilities and equity

$ 2,742,537    $ 2,736,269   
  

 

 

   

 

 

 


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

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

 

     Three months ended March 31,  
     2014     2015  

Net revenues

    

Net revenues from services

   $ 528,190      $ 587,153   

Cost of revenue

    

Services

     324,289        357,476   
  

 

 

   

 

 

 

Gross profit

$ 203,901    $ 229,677   

Operating expenses:

Selling, general and administrative expenses

  122,498      148,748   

Amortization of acquired intangible assets

  6,018      7,341   

Other operating (income) expense, net

  (1,862   (462
  

 

 

   

 

 

 

Income from operations

$ 77,247    $ 74,050   

Foreign exchange (gains) losses, net

  3,593      7,545   

Other income (expense), net

  (6,533   (8,567
  

 

 

   

 

 

 

Income before equity-method investment activity, net and income tax expense

$ 67,121    $ 57,938   

Loss (gain) on equity-method investment activity, net

  (20   2,223   
  

 

 

   

 

 

 

Income before income tax expense

$ 67,141    $ 55,715   

Income tax expense

  16,288      11,062   
  

 

 

   

 

 

 

Net income

$ 50,853    $ 44,653   

Net income attributable to noncontrolling interest

  240      —     
  

 

 

   

 

 

 

Net income attributable to Genpact Limited shareholders

$ 50,613    $ 44,653   
  

 

 

   

 

 

 

Net income available to Genpact Limited common shareholders

$ 50,613    $ 44,653   

Earnings per common share attributable to Genpact Limited common shareholders

Basic

$ 0.22    $ 0.20   

Diluted

$ 0.21    $ 0.20   

Weighted average number of common shares used in computing earnings per common share attributable to Genpact Limited common shareholders

Basic

  232,093,917      219,892,695   

Diluted

  237,275,651      222,347,101   


GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     Three months ended March 31,  
     2014     2015  

Operating activities

    

Net income attributable to Genpact Limited shareholders

   $ 50,613      $ 44,653   

Net income attributable to noncontrolling interest

     240        —     
  

 

 

   

 

 

 

Net income

$ 50,853    $ 44,653   
  

 

 

   

 

 

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Depreciation and amortization

  12,341      13,517   

Amortization of debt issuance costs

  801      1,840   

Amortization of acquired intangible assets

  6,018      7,341   

Reserve for doubtful receivables

  197      872   

Unrealized (gain) loss on revaluation of foreign currency asset/liability

  3,295      5,632   

Equity-method investment activity, net

  (20   2,223   

Stock-based compensation expense

  4,973      4,660   

Deferred income taxes

  123      (2,559

Others, net

  741      (44

Change in operating assets and liabilities:

Increase in accounts receivable

  (7,901   (13,449

Increase in other assets

  (16,968   (10,414

Increase in accounts payable

  124      177   

Decrease in other liabilities

  (47,530   (42,376

Increase in income taxes payable

  7,194      12,215   
  

 

 

   

 

 

 

Net cash provided by operating activities

$ 14,241    $ 24,288   
  

 

 

   

 

 

 

Investing activities

Purchase of property, plant and equipment

  (14,530   (13,991

Proceeds from sale of property, plant and equipment

  103      576   

Investment in equity affiliates

  —        (6,701

Payment for business acquisitions, net of cash acquired

  —        (11,678
  

 

 

   

 

 

 

Net cash used for investing activities

$ (14,427 $ (31,794
  

 

 

   

 

 

 

Financing activities

Repayment of capital lease obligations

  (502   (539

Payment of debt issue cost

  —        (1,045

Repayment of long-term debt

  (1,687   (1,687

Proceeds from short-term borrowings

  —        1,410,000   

Repayment of short-term borrowings

  —        (1,410,000

Proceeds from issuance of common shares under stock-based compensation plans

  6,061      6,524   

Payment for net settlement of stock based awards

  (8,099   (5,603

Payment of earn-out consideration

  —        (126

Distribution to noncontrolling interest

  (899   —     

Payment for stock purchased and retired

  —        (13,298

Payment for expenses related to stock purchase

  —        (12
  

 

 

   

 

 

 

Net cash used for financing activities

$ (5,126 $ (15,786
  

 

 

   

 

 

 

Effect of exchange rate changes

  1,302      (4,186

Net decrease in cash and cash equivalents

  (5,312   (23,292

Cash and cash equivalents at the beginning of the period

  571,276      461,788   
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

$ 567,266    $ 434,310   
  

 

 

   

 

 

 

Supplementary information

Cash paid during the period for interest

$ 6,143    $ 6,943   

Cash paid during the period for income taxes

$ 21,907    $ 13,120   

Property, plant and equipment acquired under capital lease

$ 534    $ 372   


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:

 

    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 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 and amortization of related acquired intangibles 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 amortization of acquired intangibles thereof, since July 2012 Genpact’s management uses 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 and amortization of acquired intangibles at formation in 2004. 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.


The following tables show the reconciliation of these adjusted financial measures from GAAP for the quarters ended March 31, 2014 and 2015:

Reconciliation of Adjusted Income from Operations

(Unaudited)

(In thousands)

 

     Three months ended March 31,  
             2014                      2015          

Income from operations per GAAP

   $ 77,247       $ 74,050   

Add: Stock-based compensation

     4,973         4,660   

Add: Amortization of acquired intangible assets

     4,491         6,112   

Add: Acquisition related expenses

     —           798   

Add/Less: Other income (expense), net, excluding net interest

     (131      458   

Add/Less: Gain (loss) on equity-method investment activity, net

     20         (2,223

Less: Net income attributable to noncontrolling interest

     (240      —     
  

 

 

    

 

 

 

Adjusted income from operations

  86,360    $ 83,855   
  

 

 

    

 

 

 

Reconciliation of Adjusted Net Income

(Unaudited)

(In thousands, except per share data)

 

     Three months ended March 31,  
             2014                      2015          

Net income attributable to Genpact Limited shareholders per GAAP

   $ 50,613       $ 44,653   

Add: Stock-based compensation

     4,973         4,660   

Add: Amortization of acquired intangible assets

     4,491         6,112   

Add: Acquisition related expenses

     —           798   

Less: Tax impact on stock-based compensation

     (1,305      (1,153

Less: Tax impact on amortization of acquired intangibles

     (1,476      (1,910

Less: Tax impact on acquisition related expenses

     —           (229
  

 

 

    

 

 

 

Adjusted net income

$ 57,296    $ 52,931   
  

 

 

    

 

 

 

Adjusted diluted earnings per share

$ 0.24    $ 0.24