PRFT Perficient Inc

 

 

WHAT: Perficient Reports Second Quarter 2015 Results

WHEN: Thursday, July 30, 2015, at 10 a.m. Eastern

CONFERENCE CALL NUMBERS: 800-884-5695 (U.S. and Canada); 617-786-2960 (International)

PARTICIPANT PASSCODE: 62080438

REPLAY TIMES: Thursday, July 30, 2015, at 1 p.m. Eastern, through Thursday, Aug. 6, 2015, at 11:59 p.m. Eastern

REPLAY NUMBER: 888-286-8010 (U.S. and Canada) 617-801-6888 (International)

REPLAY PASSCODE: 69293494

About Perficient

Perficient is a leading information technology and management consulting firm serving Global 2000 and enterprise customers throughout North America. Perficient delivers digital experience, business optimization and industry solutions that enable clients to improve productivity and competitiveness; strengthen relationships with customers, suppliers and partners; and reduce costs. Perficient's professionals serve clients from locations across North America and offshore facilities in Europe, India and China. Traded on the Nasdaq Global Select Market, Perficient is a member of the Russell 2000 index and the S&P SmallCap 600 index. Perficient is an award-winning Premier Level IBM business partner, a Microsoft National Solution Provider and Gold Certified Partner, an Oracle Platinum Partner, and a Platinum Salesforce Cloud Alliance Partner. For more information, visit www.perficient.com.

a)	client demand for our services and solutions;

b)	maintaining a balance of our supply of skills and resources with client demand;

c)	effectively competing in a highly competitive market;

d)	protecting our clients' and our data and information;

e)	risks from international operations including fluctuations in exchange rates;

f)	obtaining favorable pricing to reflect services provided;

g)	adapting to changes in technologies and offerings;

h)	risk of loss of one or more significant software vendors; and

i)	the implementation of our new enterprise resource planning system in July 2014;

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. This cautionary statement is provided pursuant to Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this release are made only as of the date hereof and we undertake no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future.

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PERFICIENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Revenues
Services		$	97,186			$	98,316			$	195,815			$	186,805
Software and hardware			7,468				13,913				15,970				18,916
Reimbursable expenses			3,810				4,480				7,277				8,158
Total revenues			108,464				116,709				219,062				213,879
Cost of revenues
Project personnel costs			61,103				59,862				123,350				115,525
Software and hardware costs			6,636				12,393				13,364				16,895
Reimbursable expenses			3,810				4,480				7,277				8,158
Other project related expenses			827				886				1,723				1,672
Stock compensation			1,187				1,240				2,387				2,322
Total cost of revenues			73,563				78,861				148,101				144,572
Gross margin			34,901				37,848				70,961				69,307
Selling, general and administrative			22,653				20,253				44,389				38,823
Stock compensation			2,160				2,180				4,467				4,293
Total selling, general and administrative			24,813				22,433				48,856				43,116
Depreciation			1,093				870				2,174				1,781
Amortization			3,411				3,730				7,212				6,466
Acquisition costs			21				1,076				21				2,569
Adjustment to fair value of contingent consideration			89				(1,677	)			174				(1,463	)
Income from operations			5,474				11,416				12,524				16,838
Net interest expense			(548	)			(425	)			(1,101	)			(593	)
Net other income (expense)			9				49				(271	)			69
Income before income taxes			4,935				11,040				11,152				16,314
Provision for income taxes			938				4,653				3,089				6,881
Net income		$	3,997			$	6,387			$	8,063			$	9,433
Basic earnings per share		$	0.12			$	0.20			$	0.24			$	0.30
Diluted earnings per share		$	0.12			$	0.19			$	0.24			$	0.29
Shares used in computing basic earnings per share			33,333				31,564				33,190				31,147
Shares used in computing diluted earnings per share			34,138				33,271				34,151				32,949

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PERFICIENT, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
		June 30,				December 31,
		2015				2014
ASSETS
Current assets:
Cash and cash equivalents		$	6,839			$	10,935
Accounts receivable, net			96,734				113,928
Prepaid expenses			3,519				2,476
Other current assets			7,028				4,679
Total current assets			114,120				132,018
Property and equipment, net			8,619				7,966
Goodwill			255,189				236,130
Intangible assets, net			51,968				46,105
Other non-current assets			4,017				3,823
Total assets		$	433,913			$	426,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	11,160			$	22,035
Other current liabilities			26,851				33,028
Total current liabilities			38,011				55,063
Long-term debt			60,000				54,000
Other non-current liabilities			10,419				12,251
Total liabilities			108,430				121,314
Stockholders' equity:
Common stock			44				43
Additional paid-in capital			353,759				334,645
Accumulated other comprehensive loss			(803	)			(651	)
Treasury stock			(101,624	)			(95,353	)
Retained earnings			74,107				66,044
Total stockholders' equity			325,483				304,728
Total liabilities and stockholders' equity		$	433,913			$	426,042

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About Non-GAAP Financial Information

This news release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), please see the section entitled "About Non-GAAP Financial Measures" and the accompanying tables entitled "Reconciliation of GAAP to Non-GAAP Measures."

About Non-GAAP Financial Measures

Perficient provides non-GAAP financial measures for EBITDAS (earnings before interest, income taxes, depreciation, amortization, and stock compensation), adjusted net income, and adjusted earnings per share data as supplemental information regarding Perficient's business performance. Perficient believes that these non-GAAP financial measures are useful to investors because they provide investors with a better understanding of Perficient's past financial performance and future results. Perficient's management uses these non-GAAP financial measures when it internally evaluates the performance of Perficient's business and makes operating decisions, including internal operating budgeting, performance measurement, and the calculation of bonuses and discretionary compensation.  Management excludes stock-based compensation related to employee stock options and restricted stock awards, the amortization of intangible assets, acquisition costs, adjustments to the fair value of contingent consideration, and income tax effects of the foregoing, when making operational decisions.

Perficient believes that providing the non-GAAP financial measures to its investors is useful because it allows investors to evaluate Perficient's performance using the same methodology and information used by Perficient's management. Specifically, adjusted net income is used by management primarily to review business performance and determine performance-based incentive compensation for executives and other employees. Management uses EBITDAS to measure operating profitability, evaluate trends, and make strategic business decisions.

Non-GAAP financial measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of discretionary judgment as to which charges are excluded from the non-GAAP financial measure. However, Perficient's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of EBITDAS, adjusted net income, and adjusted earnings per share. In addition, some items that are excluded from adjusted net income and adjusted earnings per share can have a material impact on cash. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. Perficient has historically provided non-GAAP financial measures to the investment community as a supplement to its GAAP results to enable investors to evaluate Perficient's business performance in the way that management does. Perficient's definition may be different from similar non-GAAP financial measures used by other companies and/or analysts.

The non-GAAP adjustments, and the basis for excluding them, are outlined below:

Amortization of Intangible Assets

Perficient has incurred expense on amortization of intangible assets primarily related to various acquisitions. Management excludes these items for the purposes of calculating EBITDAS, adjusted net income, and adjusted earnings per share. Perficient believes that eliminating this expense from its non-GAAP financial measures is useful to investors because the amortization of intangible assets can be inconsistent in amount and frequency, and is significantly impacted by the timing and magnitude of Perficient's acquisition transactions, which also vary substantially in frequency from period to period.

 

Acquisition Costs

Perficient incurs transaction costs related to acquisitions which are expensed in its GAAP financial statements. Management excludes these items for the purposes of calculating EBITDAS, adjusted net income, and adjusted earnings per share.  Perficient believes that excluding these expenses from its non-GAAP financial measures is useful to investors because these are expenses associated with each transaction, and are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult.

Adjustments to Fair Value of Contingent Consideration

Perficient is required to remeasure its contingent consideration liability related to acquisitions each reporting period until the contingency is settled. Any changes in fair value are recognized in earnings. Management excludes these items for the purposes of calculating adjusted net income and adjusted earnings per share. Perficient believes that excluding these adjustments from its non-GAAP financial measures is useful to investors because they are related to acquisitions, and are inconsistent in amount and frequency from period to period.

Stock-Based Compensation

Perficient incurs stock-based compensation expense under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation. Perficient excludes this item for the purposes of calculating EBITDAS, adjusted net income, and adjusted earnings per share because it is a non-cash expense, which Perficient believes is not reflective of its business performance. The nature of stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions, and different award types, making the comparison of current results with forward looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expense may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods. Perficient believes that non-GAAP measures of profitability, which exclude stock-based compensation are widely used by analysts and investors.

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PERFICIENT, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(unaudited)
(in thousands, except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
GAAP Net Income		$	3,997			$	6,387			$	8,063			$	9,433
Additions:
Provision for income taxes			938				4,653				3,089				6,881
Amortization			3,411				3,730				7,212				6,466
Acquisition costs			21				1,076				21				2,569
Adjustment to fair value of contingent consideration			89				(1,677	)			174				(1,463	)
Stock compensation			3,347				3,420				6,854				6,615
Adjusted Net Income Before Tax			11,803				17,589				25,413				30,501
Adjusted income tax (1)			3,423				6,782				8,234				11,651
Adjusted Net Income		$	8,380			$	10,807			$	17,179			$	18,850
GAAP Earnings Per Share (diluted)		$	0.12			$	0.19			$	0.24			$	0.29
Adjusted Earnings Per Share (diluted)		$	0.25			$	0.33			$	0.50			$	0.57
Shares used in computing GAAP and Adjusted Earnings Per Share (diluted)			34,138				33,271				34,151				32,949

(1) The estimated adjusted effective tax rate of 29.0% and 38.5% for the three months ended June 30, 2015 and 2014, respectively, and 32.4% and 38.2% for the six months ended  June 30, 2015 and 2014, respectively, has been used to calculate the provision for income taxes for non-GAAP purposes.

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PERFICIENT, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(unaudited)
(in thousands)
		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
GAAP Net Income		$	3,997			$	6,387			$	8,063			$	9,433
Additions:
Provision for income taxes			938				4,653				3,089				6,881
Net interest expense			548				425				1,101				593
Net other (income) expense			(9	)			(49	)			271				(69	)
Depreciation			1,093				870				2,174				1,781
Amortization			3,411				3,730				7,212				6,466
Acquisition costs			21				1,076				21				2,569
Adjustment to fair value of contingent consideration			89				(1,677	)			174				(1,463	)
Stock compensation			3,347				3,420				6,854				6,615
EBITDAS (1)		$	13,435			$	18,835			$	28,959			$	32,806

 

 

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