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Pactera Releases 2013 First Quarter Financial Results [Manufacturing Close - Up](Manufacturing Close - Up Via Acquire Media NewsEdge) Pactera Technology International, a global consulting and technology services provider strategically headquartered in China, recently reported its unaudited financial results for the first quarter of 2013 ended March 31. In a release on May 23, the Company noted that on November 9, 2012, HiSoft Technology International Limited ("HiSoft") and VanceInfo Technologies Inc. ("VanceInfo") announced the completion of merger of equals to form Pactera. HiSoft and VanceInfo's financial results were consolidated into Pactera from the date of the completion of the merger. First Quarter 2013 Financial and Operational Highlights -Net revenues for the first quarter of 2013 were $152.3 million,as compared to $65.5 million for the first quarter of 2012. -GAAP diluted net loss per ADS for the first quarter of 2013 was $0.02. -Non-GAAP diluted net income per ADS[1] for the first quarter of 2013 was $0.12. -Total full-time employees as of March 31, were 21,577 including 19,445 billable professionals. "The first quarter of 2013 was a challenging yet accomplished quarter," said Tiak Koon Loh, Chief Executive Officer of Pactera. "We experienced weaker than expected revenues and margins mainly due to lower visibility amidst the MOE integration and related business restructuring as well as a depreciating Japanese currency. However, we are on track with business and back-office integration, and we are achieving our six-month target of cost synergies ahead of schedule." First Quarter 2013 Financial Results Net revenues were $152.3 million for thefirst quarter of 2013 as compared to $65.5 million for the first quarter of 2012, reflecting an increase of 0.5 percent from $151.6 million of the pro forma net revenues[2] for the corresponding period in 2012. Revenue headwinds continued from the Company's largest telecom customer, Japan market as well as merger related integration and business restructure. [2] Pro forma net revenues of the Company for the first quarter 2012 assume that the merger occurred at the beginning of such period. The pro forma financial information is provided for information purpose only and does not purport to present what the actual results of operations would have been had the transaction actually occurred at the beginning of such period indicated nor does it purport to present the actual results of operations for any future period or financial position for any future date. Please refer to the accompanying tables at the end of the earnings release. Pactera has three service lines: Information Technology services, research and development services, and business process outsourcing. Pactera divides IT services into two categories: consulting and packaged solution services and application development, testing and maintenance services. Net revenues from IT services were $81.5 million for the first quarter of 2013, which increased 2.8 percent from $79.3 million of pro forma net revenues for the corresponding period in 2012. The increase was primarily due to the increasing demand and the expanded offerings of our CPS. Net revenues from IT services were $39.3 million for the same period in 2012. Net revenues from R&D services were $68.1 million for the first quarter of 2013, compared to $69.7 million of the pro forma net revenues and $26.2 million of net revenues for the corresponding period in 2012. Net revenues from BPO were $2.7 million for the first quarter of 2013, compared to $2.6 million of the pro forma net revenues for the first quarter of 2012. Net revenues from Pactera's top five and top ten clients accounted for 34.2 percent and 43.5 percent of net revenues, respectively, during the first quarter of 2013, compared to 33.6 percent and 46.9 percent, respectively, for the corresponding period in 2012. In terms of pro forma net revenues, top five and top ten clients accounted for 39.8 percent and 49.9 percent respectively for the first quarter of 2012. Gross profit was $39.5 million for the first quarter of 2013, compared to $22.9 millionfor the corresponding period in 2012. During the first quarter of 2013, gross margin was 25.9 percent, as compared to 34.9 percent for the first quarter of 2012. Total operating expenses were $43.2 million for the first quarter of 2013 compared to $16.3 million for the corresponding period in 2012. Operating expenses in the first quarter of 2013 reflect $2.4 million of merger related expenses, including professional fees, severance costs, and facilities and system integration expenses. Operating loss for the first quarter of 2013 was $3.7 million, compared to an operating income of $6.5 million for the corresponding period in 2012. Non-GAAP operating income for the first quarter in 2013 was $8.3 million, as compared to $9.2 million in the corresponding period in 2012. Operating margin was negative 2.4 percent for the first quarter of 2013, comparedto 10.0 percent for the same period in 2012. Non- GAAP operating margin was 5.5 percent for the first quarter of 2013, compared to 14.0 percent for the corresponding period in 2012. Income tax benefit was $2.4 million in the first quarter of 2013, compared to income tax expenses of $0.9 million in the same period 2012. The tax benefit was the result of obtaining the Key Software Enterprise status with a preferential tax treatment retroactively granted for the years 2011 and 2012. Net loss attributable to Pactera was $1.7 million for the first quarter of 2013, compared to a net income of $6.1 million for the corresponding period in 2012. Diluted net loss per ADS was $0.02 for the first quarter of 2013, as compared to diluted net income per ADS of $0.14 in the corresponding period of 2012. Non-GAAP net income was$10.1 million for the first quarter of 2013, compared to $8.7 million for the same period in 2012. Non- GAAP diluted net income per ADS was $0.12 in the first quarter of 2013, compared to $0.20 in the corresponding period of 2012. As of March 31, Pactera had cash and cash equivalents, restricted cash, term deposits and short-term investment totaling $144.9 million. Operating cash flow for the first quarter of 2013 was a net outflow of approximately $31.6 million. Days sales outstanding was 137 days for the quarter and 124 days for the last 12 months on a pro forma basis. In December 2012, the Company announced that its Board of Directors has approved a share repurchase program. Under the program, the Company has been authorized, but is not obligated, to repurchase up to $30 million worth of outstanding ADSs representing the common shares of the Company from time to time over the next 12 months, depending on market conditions as well as subject to the relevant rules under US securities regulations. As of April 8, 4,643,359 ADSs were repurchased for a total consideration of $30 million from open market under this program. On May 20, the Company announced that its Board of Directors had received a non-binding proposal letter, dated May 20, from an affiliate of funds managed or advised by Blackstone, the Company's non-executive Chairman, Chris Chen, its Chief Executive Officer, Tiak Koon Loh, and its Executive Committee members, David Chen, Sidney Huang and Jun Su (collectively, the "Buyer Consortium") to acquire all of the outstanding shares of Pactera not currently owned by the Buyer Consortium in a going private transaction (the "Transaction") for US$7.50 per American Depositary Share ("ADS", each ADS representing one common share of the Company) in cash, subject to certain conditions. According to the proposal letter, the Buyer Consortium intends to form an acquisition vehicle for the purpose of implementing the Transaction, and the Transaction is intended to be financed with a combination of equity capital funded by the Buyer Consortium and third-party debt. The Company's Board of Directors has formed a committee of independent directors (the "Independent Committee") to consider the proposed transaction. No decisions have been made by the Independent Committee with respect to the Company's response to the Transaction. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law. For the second quarter of 2013, based on current market and operating conditions and current book orders, Pactera expects: -Net revenues to be at least $163 million, compared to $166.5 million in the second quarter of 2012 on a pro-forma basis. Excluding the revenues from our large telecom customer in both periods, this represents an increase of at least 10 percent from the second quarter 2012. -Non-GAAP diluted net income per ADS to be at least $0.14, estimated based on 84.5 million weighted average equivalent ADSs outstanding. For the full year 2013, based on current market and operating conditions, Pactera expects: -Excluding the revenues from our large telecom customer for both 2012 and 2013, net revenues to be between $635 million and $640 million, representing an increase between 10 percent and 11 percent from the 2012 pro forma revenues of $577 million. Based on our current visibility, we estimate net revenues from our large telecom customer to be approximately $40 million to $45 million, which would result in a total net revenue for the Company to be between $675 million and $685 million in 2013, compared to $673 million in 2012 on a pro forma basis. -Non-GAAP diluted net income per ADS to be in the range of $0.68 to $0.73, estimated based on 85.5 million weighted average equivalent ADSs outstanding. These estimates are based on current market and operating conditions, are subject to change, and may be influenced positively or negatively by factors outside the Company's control, including but not limited to macroeconomic events in the markets in which the Company operates. See "Safe Harbor Statement" below for additional information regarding forward-looking statements. Pactera Technology International formed by a merger of equals between HiSoft Technology International Limited and VanceInfo Technologies Inc., is a global consulting and technology services provider strategically headquartered in China. More information: www.pactera.com ((Comments on this story may be sent to [email protected])) (c) 2013 ProQuest Information and Learning Company; All Rights Reserved. |