August 4, 2011

Sapient Reports Second Quarter 2011 Results and Declares $0.35 Per Share Special Dividend

Service Revenues Up 27% Over Q2 2010
Non-GAAP Operating Profit Increases 52% Over Q2 2010



BOSTON--(BUSINESS WIRE)-- Sapient (NASDAQ:SAPE - News) today reported the following financial results for the second quarter ended June 30, 2011:

  • Service revenues were $254.6 million compared to $200.4 million in the second quarter of 2010, an increase of $54.2 million or 27%. Sequentially, service revenues were up $13.3 million, or 6%, from $241.3 million in the first quarter of 2011. On a constant currency basis, revenues increased 24% over the second quarter of 2010 and 5% sequentially.
  • GAAP income from operations was $23.1 million, or 9.1% of service revenues, up 80% from $12.9 million, or 6.4% of service revenues, reported in the second quarter of 2010.
  • Non-GAAP income from operations was $29.9 million, or 11.8% of service revenues, up 52% from $19.8 million, or 9.9% of service revenues, reported in the second quarter of 2010.
  • GAAP diluted net income per share was $0.11, compared to $0.06 in the second quarter of 2010.
  • Non-GAAP diluted net income per share was $0.14, compared to $0.09 in the second quarter of 2010.

“Our 27% year-over-year organic revenue growth and overall operating performance in the quarter demonstrate our success in the market,” said Sapient President and Chief Executive Officer Alan J. Herrick. “We remain excited about the growth opportunities ahead and our unique position to capitalize on those opportunities. We are pleased to be able to return excess capital to our stockholders through a special dividend due to our strong financial position and confidence in our outlook.”

The company generated cash from operations of $38.4 million in the second quarter of 2011, an increase of 153% from $15.2 million in the second quarter of 2010. As of June 30, 2011, the company had cash, cash equivalents and marketable securities of $242.6 million. Days sales outstanding was 69 days for the second quarter of 2011, down from 73 days in the first quarter of 2011 and equal to the 69 days for the second quarter of 2010.

Special Dividend

The company’s Board of Directors declared a special dividend in the amount of $0.35 per share payable on August 29, 2011 to stockholders of record at the close of business on August 15, 2011.

Outlook

Sapient management provided the following guidance:

  • For the third quarter ending September 30, 2011, service revenues are expected to be $260 million to $268 million.
  • Third quarter 2011 non-GAAP operating margin is expected to be 12.5% to 13.5%.

Webcast and Conference Call

Sapient will host a discussion of its second 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
Conference ID: 83850405

The link to the webcast will be posted at:

http://sape.client.shareholder.com/events.cfm

In addition, a re-broadcast of the conference call will be available from August 4 at 7:30 p.m. ET through September 4 at 11:59 p.m. ET. The replay information is as follows:

US: (855) 859-2056
International: (404) 537-3406
Conference ID: 83850405

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 currencies 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 third quarter of 2011 – that involve a number of risks and uncertainties. Actual results could differ materially from management’s expectations. 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 risk factors set forth in the company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as filed with the SEC.

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 June 30,   Six Months Ended June 30,
      2011       2010     2011     2010
                 
    (in thousands, except per share amounts)
Revenues:                
Service revenues   $ 254,616     $ 200,351   $ 495,956   $ 383,574
Reimbursable expenses     10,842       10,350     19,396     18,850
Total gross revenues     265,458       210,701     515,352     402,424
Operating expenses:                
Project personnel expenses     176,739       139,345     343,415     267,112
Reimbursable expenses     10,842       10,350     19,396     18,850
Total project personnel expenses and reimbursable expenses     187,581       149,695     362,811     285,962
Selling and marketing expenses     10,316       10,225     20,472     18,872
General and administrative expenses     42,976       36,435     82,081     72,378
Restructuring and other related (benefits) charges     (56 )     128     5,586     414
Amortization of purchased intangible assets     1,288       1,359     2,561     2,826
Acquisition costs and other related charges     223       -     223     111
Total operating expenses     242,328       197,842     473,734     380,563
                 
Income from operations     23,130       12,859     41,618     21,861
                 
Interest and other income, net     1,256       745     2,715     1,545
                 
Income before income taxes     24,386       13,604     44,333     23,406
Provision for income taxes     9,182       6,000     16,971     9,563
Net income   $ 15,204     $ 7,604   $ 27,362   $ 13,843
                 
Basic net income per share   $ 0.11     $ 0.06   $ 0.20   $ 0.11
Diluted net income per share   $ 0.11     $ 0.06   $ 0.19   $ 0.10
                 
Weighted average common shares     137,608       130,915     136,954     130,487
Weighted average dilutive common share equivalents     4,464       6,996     4,368     6,985
Weighted average common shares and dilutive common share equivalents
    142,072       137,911     141,322     137,472
 
 
 
 
 

 

 

 

Sapient Corporation
Consolidated Unaudited Condensed Balance Sheets
         
         
    June 30, 2011   December 31, 2010
    (in thousands)
ASSETS
Current assets:        
Cash and cash equivalents   $ 228,358   $ 219,448
Marketable securities, current portion     9,120     8,861
Restricted cash, current portion     560     1,416
Accounts receivable, less allowance for doubtful accounts     141,474     136,300
Unbilled revenues     76,165     49,765
Deferred tax assets, current portion     17,416     23,938
Prepaid expenses and other current assets     28,083     21,256
Total current assets     501,176     460,984
Marketable securities, net of current portion     1,290     1,269
Restricted cash, net of current portion     3,239     3,093
Property and equipment, net     49,032     35,571
Purchased intangible assets, net     15,318     17,629
Goodwill     83,415     77,865
Deferred tax assets, net of current portion     20,180     19,692
Other assets     7,950     7,619
         
Total assets   $ 681,600   $ 623,722
         
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:        
Accounts payable   $ 26,800   $ 18,714
Accrued compensation     59,025     66,609
Accrued restructuring costs     1,269     3,129
Deferred revenues     13,461     18,558
Other current liabilities     59,628     52,011
Total current liabilities     160,183     159,021
Long-term liabilities     24,091     22,396
Total liabilities     184,274     181,417
         
Stockholders' equity     497,326     442,305
         
Total liabilities and stockholders’ equity   $ 681,600   $ 623,722
 
 
 
 
 

 

 

 

Sapient Corporation
Consolidated Unaudited Statements of Cash Flows
                 
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
      2011       2010       2011       2010  
                 
    (in thousands)
Cash flows from operating activities:                
Net income   $ 15,204     $ 7,604     $ 27,362     $ 13,843  
Adjustments to reconcile net income to net cash provided by operating activities:                
Loss recognized on disposition of fixed assets     9       8       10       147  
Unrealized loss on financial instruments     58       277       178       340  
Unrealized gain on marketable securities, net     -       -       -       (132 )
Depreciation and amortization expense     5,669       5,181       11,149       10,803  
Deferred income taxes     3,838       (3,862 )     5,822       (1,624 )
Stock-based compensation expense     5,343       5,404       9,219       9,635  
Non-cash restructuring (benefits) charges     (48 )     -       4,564       -  
Changes in operating assets and liabilities:                
Accounts receivable     (1,342 )     (13,283 )     (2,854 )     (7,912 )
Unbilled revenues     4,074       3,743       (25,710 )     (12,896 )
Prepaid expenses and other current assets     (3,500 )     (4,984 )     (6,433 )     (2,808 )
Other assets     (4 )     (544 )     (608 )     (612 )
Accounts payable     4,580       2,059       6,043       (563 )
Accrued compensation     5,472       6,006       (12,629 )     (4,234 )
Accrued restructuring costs     (1,046 )     (1,082 )     (1,900 )     (1,344 )
Deferred revenues     (3,293 )     (1,789 )     (5,344 )     (4,416 )
Other accrued liabilities     3,153       9,438       8,726       7,298  
Long-term liabilities     230       1,014       1,828       1,675  
                 
Net cash provided by operating activities     38,397       15,190       19,423       7,200  
                 
Cash flows from investing activities:                
Cash paid for acquisitions, net of cash acquired     -       (178 )     -       (3,163 )
Purchases of property and equipment and cost of internally developed software     (11,545 )     (4,867 )     (19,610 )     (7,466 )
Sales and maturities of marketable securities classified as trading     -       7,750       -       9,600  
Sales and maturities of marketable securities not classified as trading     15       -       2,212       781  
Purchases of marketable securities     (174 )     -       (2,472 )     -  
Cash (paid) received on financial instruments, net     (155 )     259       (192 )     932  
Change in restricted cash     (84 )     -       842       46  
                 
Net cash (used in) provided by investing activities     (11,943 )     2,964       (19,220 )     730  
                 
Cash flows from financing activities:                
Principal payments under capital lease obligations     (15 )     (20 )     (36 )     (41 )
Proceeds from credit facilities     2,652       -       4,420       -  
Repayment of amounts borrowed under credit facilities     (1,326 )     -       (6,188 )     -  
Proceeds from stock option and purchase plans     3,621       1,704       7,857       4,240  
Dividends paid on common stock     -       -       -       (46,832 )
                 
Net cash provided by (used in) financing activities     4,932       1,684       6,053       (42,633 )
                 
Effect of exchange rate changes on cash and cash equivalents     586       (636 )     2,654       294  
                 
Increase (decrease) in cash and cash equivalents     31,972       19,202       8,910       (34,409 )
Cash and cash equivalents, at beginning of period     196,386       142,067       219,448       195,678  
Cash and cash equivalents, at end of period   $ 228,358     $ 161,269     $ 228,358     $ 161,269  
 
 
 
 
 

 

 

 

Sapient Corporation
Unaudited Reconciliation of Non-GAAP Financial Measures
                 
                 
    Three Months Ended June 30,   Six Months Ended June 30,
      2011       2010       2011       2010  
                 
    (in thousands, except per share amounts)
                 
Service revenues   $ 254,616     $ 200,351     $ 495,956     $ 383,574  
                 
GAAP income from operations   $ 23,130     $ 12,859     $ 41,618     $ 21,861  
Stock-based compensation expense     5,343       5,404       9,219       9,635  
Restructuring and other related (benefits) charges     (56 )     128       5,586       414  
Amortization of purchased intangible assets     1,288       1,359       2,561       2,826  
Acquisition costs and other related charges     223       -       223       111  
Stock-based compensation review and restatement benefit     -       -       (3,500 )     (301 )
Non-GAAP income from operations   $ 29,928     $ 19,750     $ 55,707     $ 34,546  
                 
GAAP operating margin     9.1 %     6.4 %     8.4 %     5.7 %
Effect of adjustments detailed above     2.7 %     3.5 %     2.8 %     3.3 %
Non-GAAP operating margin     11.8 %     9.9 %     11.2 %     9.0 %
                 
                 
GAAP net income   $ 15,204     $ 7,604     $ 27,362     $ 13,843  
Stock-based compensation expense, net of tax     3,340       3,370       5,791       5,988  
Restructuring and other related (benefits) charges, net of tax     (33 )     76       3,463       352  
Amortization of purchased intangible assets, net of tax     1,036       1,052       2,061       2,177  
Acquisition costs and other related charges, net of tax     151       -       151       66  
Stock-based compensation review and restatement benefit, net of tax     -       -       (2,085 )     (179 )
Non-GAAP net income   $ 19,698     $ 12,102     $ 36,743     $ 22,247  
                 
                 
GAAP basic income per share   $ 0.11     $ 0.06     $ 0.20     $ 0.11  
Effect of adjustments detailed above   $ 0.03       0.03       0.07       0.06  
Non-GAAP basic income per share   $ 0.14     $ 0.09     $ 0.27     $ 0.17  
                 
GAAP and Non-GAAP weighted average common shares     137,608       130,915       136,954       130,487  
                 
                 
GAAP diluted income per share   $ 0.11     $ 0.06     $ 0.19     $ 0.10  
Effect of adjustments noted above and change in dilution noted below   $ 0.03     $ 0.03       0.07       0.06  
Non-GAAP diluted income per share   $ 0.14     $ 0.09     $ 0.26     $ 0.16  
                 
GAAP and Non-GAAP weighted average common shares and dilutive common share equivalents     142,072       137,911       141,322       137,472  
                                 

 

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


Close window | Back to top

Copyright 2017 Sapient Corporation