GENPACT LIMITED NEW YORK, Feb. 4, 2016 /PRNewswire/ -- Genpact Limited (NYSE: G), a global leader in digitally-powered business process management and services, today announced financial results for the fourth quarter and full year ended December 31, 2015.
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"We are very pleased with our strong fourth quarter and full year results. During 2015, we continued to execute on our strategy that is focused on key verticals, service lines and geographies to drive long-term Global Client growth," said N.V. "Tiger" Tyagarajan, Genpact's president and CEO. "Our investments in client-facing teams and exciting digital and analytics capabilities with domain expertise are resonating in the marketplace, as reflected in our all-time high bookings in 2015. Our Lean Digital(SM) approach brings together design thinking methods, digital process-centric technologies, and Lean principles along with domain expertise, which differentiates our value proposition and is helping us win a large number of complex transformational engagements."
Key Financial Results - Full Year 2015
-- Total revenue was $2.46 billion, up 8% year over year (up ~10% on a
constant currency basis).
-- Income from operations was $334.2 million, up 14% year over year, and
adjusted income from operations was $377.2 million, up 10% year over
year, with an adjusted income from operations margin of 15.3%.
-- Diluted earnings per share were $1.09, up 28% year over year, and
adjusted diluted earnings per share were $1.26, up 22% year over year.
-- The effective tax rate was 20.5%, down from 23.0% in 2014.
-- New bookings were $2.59 billion, up 20% from $2.16 billion in 2014.
-- Genpact repurchased approximately 9.9 million of its common shares
during 2015 for a total of $227 million at an average price of $23.00
per share.
Key Financial Results - Fourth Quarter 2015
-- Total revenue was $646.5 million, up 7% year over year (up ~10% on a
constant currency basis).
-- Income from operations was $83.4 million, up 18% year over year, and
adjusted income from operations was $95.6 million, up 17% year over
year, with an adjusted income from operations margin of 14.8%.
-- Diluted earnings per share were $0.30, up 44% year over year, and
adjusted diluted earnings per share were $0.34, up 32% year over year.
-- Genpact repurchased approximately 2.8 million of its common shares in
the fourth quarter for a total of $68 million at an average price of
$24.62 per share.
Revenue Details - Full Year 2015
-- Revenues from Global Clients was $2.0 billion, up 10% year over year (up
~13% on a constant currency basis), representing approximately 81% of
total revenues.
-- Revenue from GE was $460 million, down 1% year over year, representing
approximately 19% of total revenues.
-- Total BPO revenue was $1.93 billion, up 11% year over year, representing
approximately 79% of total revenues.
-- Global Client BPO revenue was $1.58 billion, up 14% year over year (up
~17% on a constant currency basis).
-- GE BPO revenue was $355 million, unchanged from 2014.
-- Total IT revenue was $528 million, down 3% year over year, representing
approximately 21% of total revenues.
-- Global Client IT revenue was $423 million, down 2% year over year.
-- GE IT revenue was $105 million, down 5% year over year.
Revenue Details - Fourth Quarter 2015
-- Revenue from Global Clients was $529 million, up 10% year over year (up
~13% on a constant currency basis), representing approximately 82% of
total revenues.
-- Revenue from GE was $117 million, down 1% year over year, representing
approximately 18% of total revenues.
-- Total BPO revenue was $507 million, up 9% year over year, representing
approximately 78% of total revenues.
-- Global Client BPO revenue was $419 million, up 11% year over year (up
~14% on a constant currency basis).
-- GE BPO revenue was $88 million, down 2% year over year.
-- Total IT revenue was $139 million, up 4% year over year, representing
approximately 22% of total revenues.
-- Global Client IT revenue was $110 million, up 5% year over year.
-- GE IT revenue was $29 million, unchanged from the fourth quarter of
2014.
Cash Flow from Operations
-- Cash from operations was $327 million for the full year 2015, up 20%
from $272 million for the full year 2014, and was $74 million in the
fourth quarter of 2015, down from $93 million in the fourth quarter of
2014.
Other Metrics
-- For the 12-month period ended December 31, 2015, the number of client
relationships generating annual revenue over $5 million increased to 103
from 89 as of December 31, 2014. This includes client relationships with
more than $15 million in annual revenue increasing to 34 from 32, and
client relationships with more than $25 million in annual revenue
increasing to 18 from 16.
-- Genpact's employee attrition rate for 2015 was approximately 27%,
measured from the first day of employment, compared to 25% for 2014.
2016 Outlook
Genpact expects:
-- Total revenue for 2016 to be in the range of $2.62 to $2.66 billion,
which represents a constant currency growth range of 8 - 10%;
-- Global Client constant currency growth to be in a range of 12.5 - 14%;
-- Adjusted income from operations margin to be approximately 15.5%; and
-- Adjusted EPS of $1.40 - $1.42 (assuming weighted average shares
outstanding of approximately 215.5 million).
Conference Call to Discuss Financial Results
Genpact's management will host an hour-long conference call beginning at 4:30 p.m. ET on February 4, 2016 to discuss the company's performance for the fourth quarter and full year 2015. To participate, callers can dial +1 (877) 723-7442 from within the U.S. or +1 (503) 406-4433 from any other country. Thereafter, callers will be prompted to enter the participant code, 18228746.
A live webcast of the call including slides with our comments will 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 model 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 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 Roger Sachs, CFA
+1 (203) 808-6725
roger.sachs@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, As of December 31,
2014 2015
----
Assets
Current assets
Cash and cash equivalents $461,788 $450,907
Accounts receivable, net 525,754 590,137
Deferred tax assets 45,486 -
Prepaid expenses and other current
assets 155,480 154,025
Total current assets $1,188,508 $1,195,069
Property, plant and
equipment, net 175,936 175,396
Deferred tax assets 59,135 99,395
Investment in equity
affiliates 494 6,677
Intangible assets, net 114,544 98,601
Goodwill 1,057,214 1,038,346
Other assets 146,706 180,005
Total assets $2,742,537 $2,793,489
========== ==========
GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share data and share count)
As of December 31, As of December 31,
2014 2015
---- ----
Liabilities and equity
Current liabilities
Short-term borrowings $135,000 $21,500
Current portion of long-term
debt 4,288 39,134
Accounts payable 15,544 10,086
Income taxes payable 13,586 24,122
Deferred tax liabilities 1,239 -
Accrued expenses and other
current liabilities 452,457 499,638
Total current liabilities $622,114 $594,480
Long-term debt, less current
portion 649,314 737,332
Deferred tax liabilities 6,671 2,093
Other liabilities 179,302 155,228
------- -------
Total liabilities $1,457,401 $1,489,133
---------- ----------
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 211,472,312
issued and outstanding as of
December 31, 2014 and December
31, 2015, respectively 2,184 2,111
Additional paid-in capital 1,296,730 1,342,022
Retained earnings 398,706 411,508
Accumulated other comprehensive income (loss) (412,484) (451,285)
Total equity $1,285,136 $1,304,356
---------- ----------
Total liabilities and equity $2,742,537 $2,793,489
========== ==========
GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data and share count)
Three months ended December 31,
-------------------------------
2013 2014 2015
---- ---- ----
Net revenues
Net revenues from services $558,459 $601,530 $646,528
Cost of revenue
Services 345,842 359,199 393,937
------- ------- -------
Gross profit $212,617 $242,331 $252,591
Operating expenses:
Selling, general and
administrative expenses 136,178 167,285 165,413
Amortization of acquired
intangible assets 6,042 7,926 6,638
Other operating (income)
expense, net (1,236) (3,746) (2,906)
------ ------ ------
Income from operations $71,633 $70,866 $83,446
Foreign exchange (gains)
losses, net 3,856 270 (1,171)
Other income (expense), net (5,204) (7,806) 69
------ ------ ---
Income before equity-method
investment activity, net and
income tax expense $62,573 $62,790 $84,686
Loss (gain) on equity-method
investment activity, net (30) 4,882 2,805
--- ----- -----
Income before income tax
expense $62,603 $57,908 $81,881
Income tax expense 12,697 12,156 17,468
------ ------ ------
Net Income $49,906 $45,752 $64,413
Net income attributable to
noncontrolling interest 1,064 - -
----- --- ---
Net income attributable to
Genpact Limited shareholders $48,842 $45,752 $64,413
Net income available to
Genpact Limited common
shareholders 48,842 45,752 64,413
Earnings per common share attributable to
Genpact Limited common shareholders
Basic 0.20 0.20 0.30
Diluted 0.21 0.21 0.30
Weighted average number of common shares
used in computing earnings per common
share attributable to Genpact Limited
common shareholders
Basic 230,871,408 217,279,606 212,697,001
Diluted 237,730,091 221,353,612 215,675,065
GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data and share count)
Year ended December 31,
-----------------------
2013 2014 2015
---- ---- ----
Net revenues
Net revenues from services $2,131,997 $2,279,438 $2,461,044
Cost of revenue
Services 1,319,571 1,378,088 1,493,547
--------- ---------
Gross profit $812,426 $901,350 $967,497
Operating expenses:
Selling, general and administrative
expenses 484,810 585,646 608,114
Amortization of acquired intangible
assets 23,645 28,543 28,513
Other operating (income) expense, net (5,556) (6,870) (3,322)
Income from operations $309,527 $294,031 $334,192
Foreign exchange (gains) losses, net (20,763) 12,363 (5,269)
Other income (expense), net (24,308) (27,283) (26,907)
Income before equity-method
investment activity, net and
income tax expense $305,982 $254,385 $312,554
Loss (gain) on equity-method investment
activity, net (169) 4,795 10,800
Income before income tax
expense $306,151 $249,590 $301,754
Income tax expense 71,100 57,419 61,937
Net Income $235,051 $192,171 $239,817
Net income attributable to
noncontrolling interest 5,334 169 -
Net income attributable to
Genpact Limited shareholders $229,717 $192,002 $239,817
======== ======== ========
Net income available to
Genpact Limited common
shareholders $229,717 $192,002 $239,817
Earnings per common share attributable
to Genpact Limited common shareholders
Basic $1.00 $0.87 $1.11
Diluted $0.97 $0.85 $1.09
Weighted average number of common shares
used in computing earnings per common
share attributable to Genpact Limited
common shareholders
Basic 229,348,411 220,847,098 216,606,542
Diluted 235,754,267 225,168,665 219,145,044
GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Year ended December 31,
2013 2014 2015
---- ---- ----
Operating activities
Net income attributable to
Genpact Limited
shareholders $229,717 $192,002 $239,817
Net income attributable to
noncontrolling interest 5,334 169 -
----- ---
Net income $235,051 $192,171 $239,817
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities:
Depreciation and
amortization 52,815 51,064 54,286
Amortization of debt
issuance costs (including
loss on extinguishment of
debt) 6,035 3,240 13,546
Amortization of acquired
intangible assets 23,645 28,543 28,513
Intangible assets write-
down - - 10,714
Reserve for doubtful
receivables 11,420 3,107 2,449
Unrealized (gain) loss on
revaluation of foreign
currency asset/liability (6,251) 9,419 (4,999)
Equity-method investment
activity, net (169) 4,795 10,800
Excess tax benefit on
stock-based compensation - - (6,560)
Stock-based compensation
expense 31,129 28,065 24,976
Deferred income taxes (1,116) (12,252) (18,713)
Others, net 5,939 1,291 (238)
Change in operating assets and
liabilities:
Increase in accounts
receivable (60,817) (24,088) (78,923)
Decrease (increase) in
prepaid expenses, other
current assets and other
assets 9,377 (31,657) (32,602)
Increase (decrease) in
accounts payable 1,785 (7,268) (3,988)
Increase in accrued
expenses, other current
liabilities and other
liabilities 9,316 27,500 69,606
Increase (decrease) in
income taxes payable (6,555) (2,092) 18,757
Net cash provided by
operating activities $311,604 $271,838 $327,441
-------- -------- --------
Investing activities
Purchase of property,
plant and equipment (48,879) (62,577) (62,173)
Proceeds from sale of
property, plant and
equipment 3,442 564 1,486
Investment in equity
affiliates - - (18,423)
Short term deposits placed (55,001) (25,000) -
Redemption of short-term
deposits 69,249 25,000 -
Payment for business
acquisitions, net of cash
acquired (49,235) (130,809) (21,363)
Proceeds from divestiture
of business, net of cash
divested 1,982 - -
-----
Net cash used for
investing activities $(78,442) $(192,822) $(100,473)
-------- --------- ---------
Financing activities
Repayment of capital lease
obligations (1,803) (2,095) (2,035)
Payment of debt issuance
and refinancing costs (8,104) - (6,584)
Proceeds from long-term
debt 121,410 - 800,000
Repayment of long-term
debt (123,098) (6,750) (684,875)
Proceeds from short-term
borrowings 275,000 195,000 1,451,500
Repayment of short-term
borrowings (355,000) (60,000) (1,565,000)
Proceeds from issuance of
common shares under
stock-based compensation
plans 45,859 30,144 16,088
Payment for net settlement
of stock-based awards (9,315) (25,975) (7,194)
Payment of earn-out
consideration (3,868) (1,088) (230)
Distribution to
noncontrolling interest (6,423) (1,487) -
Payment for stock
purchased and retired - (302,625) (226,917)
Payment for expenses
related to stock purchase - (2,543) (197)
Excess tax benefit on
stock-based compensation - - 6,560
Net cash used for
financing activities $(65,342) $(177,419) $(218,884)
-------- --------- ---------
Effect of exchange rate
changes (55,772) (11,085) (18,965)
Net increase/(decrease)
in cash and cash
equivalents 167,820 (98,403) 8,084
Cash and cash equivalents
at the beginning of the
period 459,228 571,276 461,788
------- ------- -------
Cash and cash equivalents
at the end of the period $571,276 $461,788 $450,907
======== ======== ========
Supplementary information
Cash paid during the
period for interest $30,788 $27,175 $20,950
Cash paid during the
period for income taxes $71,857 $83,803 $72,102
Property, plant and
equipment acquired under
capital lease obligations $2,342 $2,176 $1,656
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, 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 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.
Net interest referred to in the reconciliation of adjusted income from operations below represents the net total of interest expense and interest income for the periods presented.
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.
The following tables show the reconciliation of these adjusted financial measures from GAAP for the year and three months ended December 31, 2014 and 2015:
Reconciliation of Adjusted Income from Operations
(Unaudited)
(In thousands)
Year ended December 31,
Three months ended
December 31,
------------
2014 2015 2014 2015
---- ---- ---- ----
Income from operations per
GAAP $294,031 $334,192 $70,866 $83,446
Add: Stock-based
compensation 28,065 24,976 7,912 7,467
Add: Amortization of
acquired intangible assets 22,233 23,671 6,347 5,424
Add: Acquisition-related
expenses 2,772 798 795 -
Add: Other income, net,
excluding net interest 2,112 4,360 776 2,092
Less: Loss on equity-
method investment
activity, net (4,795) (10,800) (4,882) (2,805)
Less: Net income
attributable to
noncontrolling interest (169) - - -
---- --- --- ---
Adjusted income from
operations $344,249 $377,197 $81,814 $95,624
======== ======== ======= =======
Reconciliation of Adjusted Net Income
(Unaudited)
(In thousands, except per share data)
Year ended December 31, Three months ended
December 31,
------------
2014 2015 2014 2015
---- ---- ---- ----
Net income
attributable to
Genpact Limited
shareholders per
GAAP $192,002 $239,817 $45,752 $64,413
Add: Stock-based
compensation 28,065 24,976 7,912 7,467
Add: Amortization
of acquired
intangible assets 22,233 23,671 6,347 5,424
Add: Acquisition-
related expenses 2,772 798 795 -
Less: Tax impact on
stock-based
compensation (6,366) (6,125) (1,160) (1,619)
Less: Tax impact on
amortization of
acquired
intangibles (7,154) (7,413) (1,997) (1,721)
Less: Tax impact on
acquisition-
related expenses (184) (229) (131) -
Adjusted net income $231,368 $275,495 $57,518 $73,964
======== ======== ======= =======
Adjusted diluted
earnings per share $1.03 $1.26 $0.26 $0.34
(1) New bookings represents the total contract value of new contracts, and certain renewals, extensions and changes to existing contracts. Regular renewals of contracts with no change in scope are not counted as new bookings.
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SOURCE Genpact Limited
