Attached files
| file | filename |
|---|---|
| 8-K - SAPIENT CORP. 8-K - SAPIENT CORP | a50056873.htm |
Exhibit 99.1
Sapient Reports Third Quarter 2011 Results
Service Revenues Up 21% Over Q3 2010
Non-GAAP Operating Profit Increases 49% Over Q3 2010
BOSTON--(BUSINESS WIRE)--November 3, 2011--Sapient (NASDAQ: SAPE) today reported the following financial results for the third quarter ended September 30, 2011:
- Service revenues were $262.7 million compared to $217.1 million in the third quarter of 2010, an increase of $45.7 million or 21%. Sequentially, service revenues were up $8.1 million, or 3%, from $254.6 million in the second quarter of 2011. On a constant currency basis, revenues increased 19% over the third quarter of 2010 and 4% sequentially.
- GAAP income from operations was $29.1 million, or 11.1% of service revenues, up 46% from $20.0 million, or 9.2% of service revenues, reported in the third quarter of 2010.
- Non-GAAP income from operations was $38.1 million, or 14.5% of service revenues, up 49% from $25.6 million, or 11.8% of service revenues, reported in the third quarter of 2010.
- GAAP diluted net income per share was $0.13, compared to $0.10 in the third quarter of 2010.
- Non-GAAP diluted net income per share was $0.18, compared to $0.13 in the third quarter of 2010.
“We are pleased to have posted another quarter of strong growth and expanding profitability despite the uncertainties of the macroeconomic environment,” said Sapient President and Chief Executive Officer Alan J. Herrick. “We are in a strong leadership position in a dynamic and evolving marketplace and clients continue to recognize our unique value proposition.”
The company generated cash from operations of $43.5 million in the third quarter of 2011, an increase of 121% from $19.7 million in the third quarter of 2010. As of September 30, 2011, the company had cash, cash equivalents and marketable securities of $169.0 million, which includes the cash outlays related to the payment of a $0.35 per share special dividend on August 29, 2011, as well as the cash paid for the acquisitions of CLANMO and DAD during the quarter. Days sales outstanding was 66 days for the third quarter of 2011, down from 69 days in the second quarter of 2011 and 68 days for the third quarter of 2010.
Outlook
Sapient management provided the following guidance:
- For the fourth quarter ending December 31, 2011, service revenues are expected to be $258 million to $266 million.
- Fourth quarter 2011 non-GAAP operating margin is expected to be 14.5% to 15.5%.
Webcast and Conference Call
Sapient will host a discussion of its third 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.
Adjusted (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 has presented 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. However, 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 fourth quarter of 2011, including expected service revenues and expected non-GAAP operating margin – 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, 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 Report 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 North America, 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 September 30, | Nine Months Ended September 30, | |||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||
| Revenues: | ||||||||||||||||||
| Service revenues | $ | 262,730 | $ | 217,057 | $ | 758,686 | $ | 600,631 | ||||||||||
| Reimbursable expenses | 11,152 | 11,525 | 30,548 | 30,375 | ||||||||||||||
| Total gross revenues | 273,882 | 228,582 | 789,234 | 631,006 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Project personnel expenses | 176,639 | 148,003 | 520,054 | 415,115 | ||||||||||||||
| Reimbursable expenses | 11,152 | 11,525 | 30,548 | 30,375 | ||||||||||||||
| Total project personnel expenses and reimbursable expenses | 187,791 | 159,528 | 550,602 | 445,490 | ||||||||||||||
| Selling and marketing expenses | 8,632 | 9,298 | 29,104 | 28,170 | ||||||||||||||
| General and administrative expenses | 44,337 | 38,443 | 126,418 | 110,821 | ||||||||||||||
| Restructuring and other related charges | 1,191 | 34 | 6,777 | 448 | ||||||||||||||
| Amortization of purchased intangible assets | 1,725 | 1,301 | 4,286 | 4,127 | ||||||||||||||
| Acquisition costs and other related charges | 1,082 | - | 1,305 | 111 | ||||||||||||||
| Total operating expenses | 244,758 | 208,604 | 718,492 | 589,167 | ||||||||||||||
| Income from operations | 29,124 | 19,978 | 70,742 | 41,839 | ||||||||||||||
| Interest and other income, net | 2,037 | 942 | 4,752 | 2,487 | ||||||||||||||
| Income before income taxes | 31,161 | 20,920 | 75,494 | 44,326 | ||||||||||||||
| Provision for income taxes | 12,059 | 6,645 | 29,030 | 16,208 | ||||||||||||||
| Net income | $ | 19,102 | $ | 14,275 | $ | 46,464 | $ | 28,118 | ||||||||||
| Basic net income per share | $ | 0.14 | $ | 0.11 | $ | 0.34 | $ | 0.21 | ||||||||||
| Diluted net income per share | $ | 0.13 | $ | 0.10 | $ | 0.33 | $ | 0.20 | ||||||||||
| Weighted average common shares | 138,679 | 132,774 | 137,539 | 131,517 | ||||||||||||||
| Weighted average dilutive common share equivalents | 3,929 | 6,469 | 4,221 | 6,796 | ||||||||||||||
|
Weighted average common shares and dilutive common share equivalents |
142,608 | 139,243 | 141,760 | 138,313 | ||||||||||||||
| Sapient Corporation | |||||||||||
| Consolidated Unaudited Condensed Balance Sheets | |||||||||||
| September 30, 2011 | December 31, 2010 | ||||||||||
| (in thousands) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 155,294 | $ | 219,448 | |||||||
| Marketable securities, current portion | 8,387 | 8,861 | |||||||||
| Restricted cash, current portion | 266 | 1,416 | |||||||||
| Accounts receivable, less allowance for doubtful accounts | 145,846 | 136,300 | |||||||||
| Unbilled revenues | 77,109 | 49,765 | |||||||||
| Deferred tax assets, current portion | 16,229 | 23,938 | |||||||||
| Prepaid expenses and other current assets | 26,730 | 21,256 | |||||||||
| Total current assets | 429,861 | 460,984 | |||||||||
| Marketable securities, net of current portion | 1,290 | 1,269 | |||||||||
| Restricted cash, net of current portion | 3,779 | 3,093 | |||||||||
| Property and equipment, net | 53,160 | 35,571 | |||||||||
| Purchased intangible assets, net | 39,666 | 17,629 | |||||||||
| Goodwill | 108,672 | 77,865 | |||||||||
| Deferred tax assets, net of current portion | 20,262 | 19,692 | |||||||||
| Other assets | 8,764 | 7,619 | |||||||||
| Total assets | $ | 665,454 | $ | 623,722 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 30,557 | $ | 18,714 | |||||||
| Accrued compensation | 71,715 | 66,609 | |||||||||
| Accrued restructuring costs, current portion | 1,179 | 3,129 | |||||||||
| Deferred revenues | 18,056 | 18,558 | |||||||||
| Other current liabilities | 49,580 | 52,011 | |||||||||
| Total current liabilities | 171,087 | 159,021 | |||||||||
| Accrued restructuring costs, net of current portion | 436 | - | |||||||||
| Other long-term liabilities | 40,983 | 22,396 | |||||||||
| Total liabilities | 212,506 | 181,417 | |||||||||
| Stockholders' equity | 452,948 | 442,305 | |||||||||
| Total liabilities and stockholders’ equity | $ | 665,454 | $ | 623,722 | |||||||
| Sapient Corporation | ||||||||||||||||||||||
| Consolidated Unaudited Statements of Cash Flows | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||
| Net income | $ | 19,102 | $ | 14,275 | $ | 46,464 | $ | 28,118 | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||
| Loss recognized on disposition of fixed assets | 32 | 93 | 42 | 240 | ||||||||||||||||||
| Unrealized (gain) loss on financial instruments | (28 | ) | (173 | ) | 150 | 167 | ||||||||||||||||
| Unrealized gain on marketable securities, net | - | - | - | (132 | ) | |||||||||||||||||
| Depreciation and amortization expense | 7,080 | 5,234 | 18,229 | 16,037 | ||||||||||||||||||
| Deferred income taxes | 3,339 | 4,385 | 9,161 | 2,761 | ||||||||||||||||||
| Stock-based compensation expense | 5,018 | 4,289 | 14,237 | 13,924 | ||||||||||||||||||
| Non-cash restructuring charges | - | - | 4,564 | - | ||||||||||||||||||
| Changes in operating assets and liabilities, net of impact of acquisitions: | ||||||||||||||||||||||
| Accounts receivable | (1,585 | ) | (1,542 | ) | (4,439 | ) | (9,454 | ) | ||||||||||||||
| Unbilled revenues | 1,430 | (5,939 | ) | (24,280 | ) | (18,835 | ) | |||||||||||||||
| Prepaid expenses and other current assets | 479 | (3,804 | ) | (5,954 | ) | (6,612 | ) | |||||||||||||||
| Other assets | (62 | ) | (769 | ) | (670 | ) | (1,381 | ) | ||||||||||||||
| Accounts payable | 2,275 | 1,667 | 8,318 | 1,104 | ||||||||||||||||||
| Accrued compensation | 9,008 | 5,568 | (3,621 | ) | 1,334 | |||||||||||||||||
| Accrued restructuring costs | 361 | (1,113 | ) | (1,539 | ) | (2,457 | ) | |||||||||||||||
| Deferred revenues | 4,500 | 250 | (844 | ) | (4,166 | ) | ||||||||||||||||
| Other current liabilities | (11,188 | ) | (3,863 | ) | (2,462 | ) | 3,435 | |||||||||||||||
| Other long-term liabilities | 3,755 | 1,100 | 5,583 | 2,775 | ||||||||||||||||||
| Net cash provided by operating activities | 43,516 | 19,658 | 62,939 | 26,858 | ||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||
| Cash paid for acquisitions, net of cash acquired | (44,602 | ) | - | (44,602 | ) | (3,163 | ) | |||||||||||||||
| Purchases of property and equipment and cost of internally developed software | (9,101 | ) | (7,553 | ) | (28,711 | ) | (15,019 | ) | ||||||||||||||
| Sales and maturities of marketable securities classified as trading | - | 6,825 | - | 16,425 | ||||||||||||||||||
| Sales and maturities of marketable securities not classified as trading | 2,258 | 100 | 4,470 | 881 | ||||||||||||||||||
| Purchases of marketable securities | (2,311 | ) | - | (4,783 | ) | - | ||||||||||||||||
| Cash (paid) received on financial instruments, net | (1 | ) | (397 | ) | (193 | ) | 535 | |||||||||||||||
| Change in restricted cash | (188 | ) | (73 | ) | 654 | (27 | ) | |||||||||||||||
| Net cash used in investing activities | (53,945 | ) | (1,098 | ) | (73,165 | ) | (368 | ) | ||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||
| Principal payments under capital lease obligations | (18 | ) | (21 | ) | (54 | ) | (62 | ) | ||||||||||||||
| Proceeds from credit facilities | 5,967 | 3,050 | 10,387 | 3,050 | ||||||||||||||||||
| Repayment of amounts borrowed under credit facilities | (8,619 | ) | - | (14,807 | ) | - | ||||||||||||||||
| Proceeds from stock option and purchase plans | 531 | 1,703 | 8,388 | 5,943 | ||||||||||||||||||
| Repayment of acquired debt | (3,766 | ) | - | (3,766 | ) | - | ||||||||||||||||
| Dividends paid on common stock | (48,873 | ) | - | (48,873 | ) | (46,832 | ) | |||||||||||||||
| Net cash (used in) provided by financing activities | (54,778 | ) | 4,732 | (48,725 | ) | (37,901 | ) | |||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (7,857 | ) | 5,367 | (5,203 | ) | 5,661 | ||||||||||||||||
| Increase (decrease) in cash and cash equivalents | (73,064 | ) | 28,659 | (64,154 | ) | (5,750 | ) | |||||||||||||||
| Cash and cash equivalents, at beginning of period | 228,358 | 161,269 | 219,448 | 195,678 | ||||||||||||||||||
| Cash and cash equivalents, at end of period | $ | 155,294 | $ | 189,928 | $ | 155,294 | $ | 189,928 | ||||||||||||||
| Sapient Corporation | |||||||||||||||||||||
| Unaudited Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||
| Service revenues | $ | 262,730 | $ | 217,057 | $ | 758,686 | $ | 600,631 | |||||||||||||
| GAAP income from operations | $ | 29,124 | $ | 19,978 | $ | 70,742 | $ | 41,839 | |||||||||||||
| Stock-based compensation expense | 5,018 | 4,289 | 14,237 | 13,924 | |||||||||||||||||
| Restructuring and other related charges | 1,191 | 34 | 6,777 | 448 | |||||||||||||||||
| Amortization of purchased intangible assets | 1,725 | 1,301 | 4,286 | 4,127 | |||||||||||||||||
| Acquisition costs and other related charges | 1,082 | - | 1,305 | 111 | |||||||||||||||||
| Stock-based compensation review and restatement benefit | - | - | (3,500 | ) | (301 | ) | |||||||||||||||
| Non-GAAP income from operations | $ | 38,140 | $ | 25,602 | $ | 93,847 | $ | 60,148 | |||||||||||||
| GAAP operating margin | 11.1 | % | 9.2 | % | 9.3 | % | 7.0 | % | |||||||||||||
| Effect of adjustments detailed above | 3.4 | % | 2.6 | % | 3.1 | % | 3.0 | % | |||||||||||||
| Non-GAAP operating margin | 14.5 | % | 11.8 | % | 12.4 | % | 10.0 | % | |||||||||||||
| GAAP net income | $ | 19,102 | $ | 14,275 | $ | 46,464 | $ | 28,118 | |||||||||||||
| Stock-based compensation expense, net of tax | 3,112 | 2,653 | 8,903 | 8,641 | |||||||||||||||||
| Restructuring and other related charges, net of tax | 709 | 20 | 4,172 | 372 | |||||||||||||||||
| Amortization of purchased intangible assets, net of tax | 1,344 | 1,020 | 3,405 | 3,197 | |||||||||||||||||
| Acquisition costs and other related charges, net of tax | 750 | - | 901 | 66 | |||||||||||||||||
| Stock-based compensation review and restatement benefit, net of tax | - | - | (2,085 | ) | (179 | ) | |||||||||||||||
| Non-GAAP net income | $ | 25,017 | $ | 17,968 | $ | 61,760 | $ | 40,215 | |||||||||||||
| GAAP basic income per share | $ | 0.14 | $ | 0.11 | $ | 0.34 | $ | 0.21 | |||||||||||||
| Effect of adjustments detailed above | 0.04 | 0.03 | 0.11 | 0.10 | |||||||||||||||||
| Non-GAAP basic income per share | $ | 0.18 | $ | 0.14 | $ | 0.45 | $ | 0.31 | |||||||||||||
| GAAP and Non-GAAP weighted average common shares | 138,679 | 132,774 | 137,539 | 131,517 | |||||||||||||||||
| GAAP diluted income per share | $ | 0.13 | $ | 0.10 | $ | 0.33 | $ | 0.20 | |||||||||||||
| Effect of adjustments noted above and change in dilution noted below | 0.05 | 0.03 | 0.11 | 0.09 | |||||||||||||||||
| Non-GAAP diluted income per share | $ | 0.18 | $ | 0.13 | $ | 0.44 | $ | 0.29 | |||||||||||||
| GAAP and Non-GAAP weighted average common shares and dilutive common share equivalents | 142,608 | 139,243 | 141,760 | 138,313 | |||||||||||||||||
CONTACT:
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