Sapient Reports Fourth Quarter and Full-Year 2012 Results
Fourth Quarter Service Revenues Up 12% Compared to Fourth Quarter 2011
Full-year 2012 Revenues Up 10% Compared to 2011
BOSTON--(BUSINESS WIRE)--
Sapient
(NASDAQ: SAPE) today reported its financial results for the fourth
quarter and year ended December 31, 2012.
For the fourth quarter of 2012:
Service revenues were $293.2 million compared to $262.4 million in the
fourth quarter of 2011, an increase of $30.8 million, or 11.7%.
Sequentially, service revenues were up $4.7 million, or 1.6%, from
$288.5 million in the third quarter of 2012. On a constant currency
basis, revenues increased 11.5% over the fourth quarter of 2011 and
increased 1.3% sequentially.
GAAP income from operations was $30.9 million, or 10.5% of service
revenues, compared to $33.8 million, or 12.9% of service revenues,
reported in the fourth quarter of 2011.
Non-GAAP income from operations was $42.4 million, or 14.5% of service
revenues, compared to $41.6 million,or 15.9% of service
revenues, reported in the fourth quarter of 2011.
GAAP diluted net income per share was $0.14, compared to $0.19 in the
fourth quarter of 2011.
Non-GAAP diluted net income per share was $0.20, compared to $0.23 in
the fourth quarter of 2011.
For the year ended December 31, 2012:
Service revenues were $1.12 billion compared to $1.02 billion for
2011, an increase of 9.8%.
GAAP income from operations was $104.1 million, compared to $104.1
million in 2011.
Non-GAAP income from operations was $143.7 million, an increase of
$8.7 million or 6.4%, from $135.0 million in 2011.
GAAP diluted net income per share was $0.46, compared to $0.51 in 2011.
Non-GAAP diluted net income per share was $0.65, compared to $0.66 in
2011.
“The company posted solid growth in 2012 despite the challenging
economic environment, expanding our client relationships globally
through continued delivery of highly differentiated capabilities,” said
Sapient Chief Executive Officer and Co-Chairman Alan J. Herrick. “In
addition to our growth, the company’s strategic position was further
strengthened through a combination of investments and acquisitions.
While the economic environment remains unsettled, we believe the company
is positioned to have an even stronger year in 2013.”
The company generated cash flow from operations of $63.9 million in the
fourth quarter of 2012, compared to $68.9 million in the fourth quarter
of 2011. For the year ended December 31, 2012, cash flow from operations
was $107.6 million compared to $131.9 million for the year ended
December 31, 2011. As of December 31, 2012, the company had cash, cash
equivalents, restricted cash and marketable securities of $251.0
million. Days sales outstanding was 63 days for the fourth quarter of
2012, down from 67 days in the third quarter of 2012 and the same as 63
days in the fourth quarter of 2011.
Outlook
Sapient management provided the following guidance:
For the first quarter ending March 31, 2013, service revenues are
expected to be in the range of $295.0 million to $300.0 million.
First quarter 2013 non-GAAP operating margin is expected to be 9.2% to
10.2%.
For the year ending December 31, 2013, service revenues are expected
to grow by 10.0% or higher.
Non-GAAP operating margin for 2013 is expected to be 12.8% or modestly
higher.
Webcast and Conference Call
Sapient will host a discussion of its fourth quarter results at 4:30
p.m. ET today, which will be broadcast live on the Internet. The dial-in
information for the conference call is:
US: (877) 291-1296 International: (720) 259-9209
To access the live webcast of the event, please click on the link below:
In addition, a re-broadcast of the webcast will be available in the
investors section of www.sapient.com.
Non-GAAP Financial Measures
Sapient provides non-GAAP financial measures to complement reported GAAP
results. 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. The
company 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,
restructuring and other related charges, amortization of purchased
intangible assets, acquisition costs and other related charges, and
income tax benefits or provisions resulting from changes in the
valuation allowance. In addition, the company may present service
revenues in constant currency terms, which excludes the effect of
currency fluctuations between the U.S. dollar and the functional
currency of the entity in which the revenue was transacted. The effect
is excluded by translating the current period's local currency service
revenues into U.S. dollars using the average local currency exchange
rates that were in effect during the prior period of comparison. Because
the company’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,
Sapient’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.
Safe Harbor Statement
This press release contains forward-looking statements – in particular,
the financial guidance for the first quarter and full-year 2013,
including expected service revenues, expected non-GAAP operating margin
and the Company’s performance in 2013 – that involve a number of risks
and uncertainties. All forward looking statements are based upon current
expectations and beliefs and various assumptions. Actual results could
differ materially from management’s expectations and the forward-looking
statements contained in this release. A number of factors could cause
actual events to differ materially from those indicated, including,
without limitation: the continued acceptance of the company’s services;
a reduction in the demand for the company’s services in light of the
current economic environment; the company’s ability to accurately set
fees for and complete its current and future client projects on a timely
basis, successfully manage risks associated with its international
operations, manage its growth and projects effectively, successfully
integrate and achieve anticipated benefits from acquisitions, including
mPhasize and iThink, and continue to attract and retain high-quality
employees; and other risks and uncertainties as set forth in the
company’s filings with the SEC, including without limitation the most
recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Any forward-looking statement speaks only as of the date on which it is
made, and the company undertakes no obligation to update any
forward-looking statements for any reason, including to reflect events
or circumstances after the date on which such statements are made or to
reflect the occurrence of anticipated or unanticipated events or
circumstances, except as required by law.
About Sapient
Sapient is a global services company that helps clients transform in the
areas of business, marketing, and technology. The company operates three
divisions that enable clients to gain a competitive advantage and
succeed in an increasingly digital world. SapientNitro, Sapient Global
Markets and Sapient Government Services fuse insight, creativity and
technology to drive innovation and to help clients navigate complex
business problems. Our approach is the subject of case studies used by
MBA programs at Harvard and Yale. The company has operations in The
Americas, Europe, and Asia-Pacific. For more information, visit www.sapient.com.
Sapient is a registered service mark of Sapient Corporation.
Sapient Corporation
Consolidated Unaudited Condensed Statements of Operations
Three Months Ended December 31,
Year Ended December 31,
2012
2011
2012
2011
(in thousands, except per share amounts)
Revenues:
Service revenues
$
293,175
$
262,397
$
1,121,010
$
1,021,083
Reimbursable expenses
10,848
10,816
40,538
41,364
Total gross revenues
304,023
273,213
1,161,548
1,062,447
Operating expenses:
Project personnel expenses
195,083
170,767
764,843
691,041
Reimbursable expenses
10,848
10,816
40,538
41,364
Total project personnel expenses and reimbursable expenses
205,931
181,583
805,381
732,405
Selling and marketing expenses
11,515
9,921
44,661
39,025
General and administrative expenses
50,582
45,093
191,599
171,759
Restructuring and other related charges (benefits)
503
(270
)
394
6,507
Amortization of purchased intangible assets
2,941
2,527
11,052
6,813
Acquisition costs and other related charges
1,640
556
4,354
1,861
Total operating expenses
273,112
239,410
1,057,441
958,370
Income from operations
30,911
33,803
104,107
104,077
Interest and other income, net
871
1,590
4,584
6,342
Income before income taxes
31,782
35,393
108,691
110,419
Provision for income taxes
12,192
8,407
43,450
37,743
Net income
$
19,590
$
26,986
$
65,241
$
72,676
Basic net income per share
$
0.14
$
0.19
$
0.47
$
0.53
Diluted net income per share
$
0.14
$
0.19
$
0.46
$
0.51
Weighted average common shares
137,128
139,126
138,188
137,788
Weighted average dilutive common share equivalents
3,749
4,170
3,921
4,208
Weighted average common shares and dilutive common share
equivalents
140,877
143,296
142,109
141,996
Sapient Corporation
Consolidated Unaudited Condensed Balance Sheets
December 31, 2012
December 31, 2011
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
234,178
$
212,406
Marketable securities, current portion
6,321
7,748
Restricted cash, current portion
5,236
426
Accounts receivable, net of allowance for doubtful accounts
168,951
156,109
Unbilled revenues
72,013
61,735
Deferred tax assets, current portion
15,809
22,739
Prepaid expenses and other current assets
36,311
22,734
Total current assets
538,819
483,897
Restricted cash, net of current portion
4,074
3,779
Marketable securities, net of current portion
1,202
1,290
Property and equipment, net
82,833
64,877
Purchased intangible assets, net
35,050
36,822
Goodwill
127,864
107,971
Deferred tax assets, net of current portion
79
629
Other assets
8,572
8,591
Total assets
$
798,493
$
707,856
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
26,937
$
25,389
Accrued restructuring costs, current portion
129
324
Accrued compensation
83,885
77,721
Deferred revenues
27,163
24,720
Other current liabilities
49,802
50,143
Total current liabilities
187,916
178,297
Accrued restructuring costs, net of current portion
246
407
Other long-term liabilities
89,785
62,790
Total liabilities
277,947
241,494
Stockholders' equity
520,546
466,362
Total liabilities and stockholders’ equity
$
798,493
$
707,856
Sapient Corporation
Consolidated Unaudited Statements of Cash Flows
Three Months Ended
Year Ended
December 31,
December 31,
2012
2011
2012
2011
(in thousands)
Cash flows from operating activities:
Net income
$
19,590
$
26,986
$
65,241
$
72,676
Adjustments to reconcile net income to net cash used in operating
activities:
Loss recognized on disposition of fixed assets
1
37
254
79
Unrealized loss (gain) on financial instruments
723
(52
)
143
98
Depreciation and amortization expense
9,274
7,957
34,544
26,186
Deferred income taxes
4,242
8,457
13,672
17,924
Provision for (recovery of) allowance for doubtful accounts, net
-
8
-
8
Stock-based compensation expense
6,409
5,019
23,795
19,256
Excess tax shortfalls (benefits) from exercise and release of
stock-based awards
511
(4,391
)
(10,100
)
(4,391
)
Non-cash restructuring charges
-
-
-
4,564
Changes in operating assets and liabilities, excluding impact of
acquisitions:
Accounts receivable
6,918
(10,779
)
(9,747
)
(15,218
)
Unbilled revenues
(1,754
)
15,464
(9,463
)
(8,816
)
Prepaid expenses and other current assets
(2,945
)
3,801
(13,782
)
(2,153
)
Other assets
(309
)
(449
)
316
(1,119
)
Accounts payable
(1,402
)
(3,996
)
(396
)
4,322
Accrued compensation
5,315
8,084
5,542
14,995
Payments of withholding taxes in connection with vesting of
stock-based awards
(239
)
(427
)
(8,918
)
(10,959
)
Accrued restructuring costs
(18
)
(886
)
(358
)
(2,425
)
Deferred revenues
4,600
7,424
(105
)
6,580
Other current liabilities
7,847
5,570
3,777
3,328
Other long-term liabilities
5,118
1,102
13,249
6,933
Net cash provided by operating activities
63,881
68,929
107,664
131,868
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired
(17,524
)
-
(17,524
)
(44,602
)
Proceeds from sale of property and equipment
332
-
364
-
Purchases of property and equipment and cost of internally developed
software
(7,891
)
(6,801
)
(38,057
)
(35,512
)
Proceeds from sales and maturities of marketable securities
classified as available-for-sale
-
2,018
1,900
6,488
Purchases of marketable securities classified as available-for-sale
(89
)
(2,121
)
(415
)
(6,904
)
Cash received (paid) on financial instruments, net
28
(658
)
(50
)
(851
)
Change in restricted cash
(823
)
(239
)
(1,710
)
415
Net cash used in investing activities
(25,967
)
(7,801
)
(55,492
)
(80,966
)
Cash flows from financing activities:
Principal payments under capital lease obligations
-
(20
)
(47
)
(74
)
Proceeds from credit facilities
-
-
-
10,387
Repayment of amounts borrowed under credit facilities
-
-
-
(14,807
)
Proceeds from stock option plans
247
1,773
1,320
10,161
Tax (shortfalls) benefits from stock plans
(511
)
4,391
10,100
4,391
Repayment of acquired debt
-
-
-
(3,766
)
Dividends paid on common stock
-
-
-
(48,873
)
Repurchases of common stock
-
-
(44,603
)
-
Net cash (used in) provided by financing activities
(264
)
6,144
(33,230
)
(42,581
)
Effect of exchange rate changes on cash and cash equivalents
(2,993
)
(10,160
)
2,830
(15,363
)
Increase (decrease) in cash and cash equivalents
34,657
57,112
21,772
(7,042
)
Cash and cash equivalents, at beginning of period
199,521
155,294
212,406
219,448
Cash and cash equivalents, at end of period
$
234,178
$
212,406
$
234,178
$
212,406
Sapient Corporation
Unaudited Reconciliation of Non-GAAP Financial Measures
Three Months Ended December 31,
Year Ended December 31,
2012
2011
2012
2011
(in thousands, except per share amounts)
Service revenues
$
293,175
$
262,397
$
1,121,010
$
1,021,083
GAAP income from operations
$
30,911
$
33,803
$
104,107
$
104,077
Stock-based compensation expense
6,409
5,019
23,795
19,256
Restructuring and other related charges (benefits)
503
(270
)
394
6,507
Amortization of purchased intangible assets
2,941
2,527
11,052
6,813
Acquisition costs and other related charges
1,640
556
4,354
1,861
Stock-based compensation review and restatement benefit
-
-
-
(3,500
)
Non-GAAP income from operations
$
42,404
$
41,635
$
143,702
$
135,014
GAAP operating margin
10.5
%
12.9
%
9.3
%
10.2
%
Effect of adjustments detailed above
4.0
%
3.0
%
3.5
%
3.0
%
Non-GAAP operating margin
14.5
%
15.9
%
12.8
%
13.2
%
GAAP net income
$
19,590
$
26,986
$
65,241
$
72,676
Stock-based compensation expense, net of tax
4,119
3,155
15,051
12,058
Restructuring and other related charges (benefits), net of tax
352
(173
)
279
3,999
Amortization of purchased intangible assets, net of tax
2,335
1,959
8,793
5,364
Acquisition costs and other related charges, net of tax
1,088
411
2,965
1,312
Stock-based compensation review and restatement benefit, net of tax
-
-
-
(2,085
)
Non-GAAP net income
$
27,484
$
32,338
$
92,329
$
93,324
GAAP basic income per share
$
0.14
$
0.19
$
0.47
$
0.53
Effect of adjustments detailed above
0.06
0.04
0.20
0.15
Non-GAAP basic income per share
$
0.20
$
0.23
$
0.67
$
0.68
GAAP and Non-GAAP weighted average common shares
137,128
139,126
138,188
137,788
GAAP diluted income per share
$
0.14
$
0.19
$
0.46
$
0.51
Effect of adjustments noted above and change in dilution noted below
0.06
0.04
0.19
0.15
Non-GAAP diluted income per share
$
0.20
$
0.23
$
0.65
$
0.66
GAAP and Non-GAAP weighted average common shares and dilutive
common share equivalents
140,877
143,296
142,109
141,996
Investor Relations Contact: Sapient Dean Ridlon,
+1-617-963-1598 dridlon@sapient.com or Media
Contact: Sapient David LaBar, +1-646-478-9846 dlabar@sapient.com
Press Release $SAPE Sapient Corp.
Fourth Quarter Service Revenues Up 12% Compared to Fourth Quarter 2011
Full-year 2012 Revenues Up 10% Compared to 2011
BOSTON--(BUSINESS WIRE)-- Sapient (NASDAQ: SAPE) today reported its financial results for the fourth quarter and year ended December 31, 2012.
For the fourth quarter of 2012:
For the year ended December 31, 2012:
“The company posted solid growth in 2012 despite the challenging economic environment, expanding our client relationships globally through continued delivery of highly differentiated capabilities,” said Sapient Chief Executive Officer and Co-Chairman Alan J. Herrick. “In addition to our growth, the company’s strategic position was further strengthened through a combination of investments and acquisitions. While the economic environment remains unsettled, we believe the company is positioned to have an even stronger year in 2013.”
The company generated cash flow from operations of $63.9 million in the fourth quarter of 2012, compared to $68.9 million in the fourth quarter of 2011. For the year ended December 31, 2012, cash flow from operations was $107.6 million compared to $131.9 million for the year ended December 31, 2011. As of December 31, 2012, the company had cash, cash equivalents, restricted cash and marketable securities of $251.0 million. Days sales outstanding was 63 days for the fourth quarter of 2012, down from 67 days in the third quarter of 2012 and the same as 63 days in the fourth quarter of 2011.
Outlook
Sapient management provided the following guidance:
Webcast and Conference Call
Sapient will host a discussion of its fourth quarter results at 4:30 p.m. ET today, which will be broadcast live on the Internet. The dial-in information for the conference call is:
US: (877) 291-1296
International: (720) 259-9209
To access the live webcast of the event, please click on the link below:
http://sape.client.shareholder.com/events.cfm
In addition, a re-broadcast of the webcast will be available in the investors section of www.sapient.com.
Non-GAAP Financial Measures
Sapient provides non-GAAP financial measures to complement reported GAAP results. 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. The company 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, restructuring and other related charges, amortization of purchased intangible assets, acquisition costs and other related charges, and income tax benefits or provisions resulting from changes in the valuation allowance. In addition, the company may present service revenues in constant currency terms, which excludes the effect of currency fluctuations between the U.S. dollar and the functional currency of the entity in which the revenue was transacted. The effect is excluded by translating the current period's local currency service revenues into U.S. dollars using the average local currency exchange rates that were in effect during the prior period of comparison. Because the company’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, Sapient’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.
Safe Harbor Statement
This press release contains forward-looking statements – in particular, the financial guidance for the first quarter and full-year 2013, including expected service revenues, expected non-GAAP operating margin and the Company’s performance in 2013 – that involve a number of risks and uncertainties. All forward looking statements are based upon current expectations and beliefs and various assumptions. Actual results could differ materially from management’s expectations and the forward-looking statements contained in this release. A number of factors could cause actual events to differ materially from those indicated, including, without limitation: the continued acceptance of the company’s services; a reduction in the demand for the company’s services in light of the current economic environment; the company’s ability to accurately set fees for and complete its current and future client projects on a timely basis, successfully manage risks associated with its international operations, manage its growth and projects effectively, successfully integrate and achieve anticipated benefits from acquisitions, including mPhasize and iThink, and continue to attract and retain high-quality employees; and other risks and uncertainties as set forth in the company’s filings with the SEC, including without limitation the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances, except as required by law.
About Sapient
Sapient is a global services company that helps clients transform in the areas of business, marketing, and technology. The company operates three divisions that enable clients to gain a competitive advantage and succeed in an increasingly digital world. SapientNitro, Sapient Global Markets and Sapient Government Services fuse insight, creativity and technology to drive innovation and to help clients navigate complex business problems. Our approach is the subject of case studies used by MBA programs at Harvard and Yale. The company has operations in The Americas, Europe, and Asia-Pacific. For more information, visit www.sapient.com.
Sapient is a registered service mark of Sapient Corporation.
Investor Relations Contact:
Sapient
Dean Ridlon, +1-617-963-1598
dridlon@sapient.com
or
Media Contact:
Sapient
David LaBar, +1-646-478-9846
dlabar@sapient.com
Source: Sapient Corporation