EPAM Systems Reports Results for First Quarter 2013

Newtown, PA - May 9, 2013 - In a press release issued earlier today by EPAM Systems, Inc. (NYSE: EPAM), there was typographical error in the headline of the press release. The second bullet of the headline should read, "Second quarter revenues expected to increase 26% to 28% year-over-year." The corrected release follows:

• First quarter revenues up 32% year-over-year 

• Second quarter revenues expected to increase 26% to 28% year-over-year 

Newtown, PA - May 9, 2013 - EPAM Systems, Inc. (NYSE: EPAM), a leading provider of complex software engineering solutions and a leader in Central and Eastern European IT services delivery, today announced results for the quarter ended March 31, 2013.

"We continue to execute our strategy which is focused on complex, industry-driven solutions and high quality software engineering services, both of which are in strong demand in today's rapidly changing technology environment. Our solid performance is due in large part to our ability to execute this strategy while continuing to invest in qualified professionals, productivity tools and long-term client relationships. As a result of these initiatives, we continue to gain market share within our existing customer base, expand our client base across virtually all of our geographies and verticals, and deliver double digit revenue growth," commented Arkadiy Dobkin, CEO and President of EPAM Systems.

First Quarter 2013 Highlights

• Revenues increased to $124.2 million, up 31.6% year-over-year;  

• GAAP income from operations was $15.5 million, an increase of 12.7% compared to $13.8 million in the first quarter of 2012; 

• Non-GAAP income from operations was $18.8 million, an increase of $2.7 million or 16.8% from $16.1 million in the first quarter of 2012;   

• Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.27, flat compared to the year-ago quarter; 

• Non-GAAP quarterly diluted EPS was $0.35, up 12.9% from $0.31 in the year-ago quarter.  

EPAM used cash from operations of $11.7 million in the first quarter of 2013.  At March 31, 2013, the Company had cash and cash equivalents of $102.8 million.

Reconciliations of non-GAAP financial measures to operating results and diluted EPS are included at the end of this release.

Full Year and Second Quarter 2013 Outlook

"The outlook for services remains strong and we expect to see continued growth momentum in all of our markets.  Our growth, whether organic or through acquisitions, will be driven by our ability to expand our services, add new vertical markets and provide outstanding technical expertise, especially for new and emerging technologies," concluded Mr. Dobkin.

Based on current conditions, EPAM reiterates full year guidance of expected year-over-year revenues growth in the range of 23% to 25%.  Non-GAAP net income growth for 2013 is expected to be in the range of 12% to 15% year-over-year, with an effective tax rate of approximately 20%.

For the second quarter of 2013, EPAM expects revenues between $131 million and $133 million, representing a growth rate of 26% to 28% over second quarter 2012 revenues.  Second quarter 2013 non-GAAP diluted EPS is expected to be in the range of $0.38 to $0.40 based on an estimated second quarter 2013 weighted average of 48.0 million diluted shares.

Conference Call Information

EPAM will hold a conference call to discuss its first quarter 2013 results at 8:00 a.m. Eastern time, on Thursday, May 9, 2013. A live webcast of the call may be accessed over the Internet from EPAM's Investor Relations website at http://investors.epam.com . Participants should follow the instructions provided on the website to download and install the necessary audio applications. The conference call also is available by dialing 1-877-407-0784 (domestic) or 1-201-689-8560 (international). Participants should ask for the EPAM Systems first quarter 2013 conference call.

A replay of the live conference call will be available approximately one hour after the call. The replay will be available on EPAM's website or by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the replay passcode 412950. The telephonic replay will be available until May 16, 2013.

About EPAM Systems

Established in 1993, EPAM Systems, Inc. (NYSE:EPAM) provides software engineering solutions through its leading Central and Eastern European service delivery platform. Headquartered in the United States, EPAM employs approximately 8,700 IT professionals and serves clients worldwide from its locations in the United States, Canada, UK, Switzerland, Germany, Sweden, Belarus, Hungary, Russia, Ukraine, Kazakhstan and Poland.

Non-GAAP Financial Measures

EPAM supplements results reported in accordance with principles generally accepted in the United States, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in EPAM's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing EPAM's business and evaluating its performance. Management also believes these measures help investors compare EPAM's operating performance with its results in prior periods and compare EPAM and similar companies. EPAM 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, write-off and recovery, amortization of purchased intangible assets, goodwill impairment, legal settlement, foreign exchange gains and losses, and acquisition-related costs. Additionally, when important to management's analysis, operating results are compared in "constant currency terms" to exclude the effect of exchange rate fluctuations by translating the current period's revenues and expenses into U.S. dollars at the weighted average exchange rates of the prior period of comparison. Because EPAM'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 EPAM's industry. Consequently, EPAM'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.

Forward-Looking Statements

This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. EPAM undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

Contact:
EPAM Systems, Inc.
Ilya Cantor, Chief Financial Officer
Phone: +1-267-759-9000 x64588
Fax: +1-267-759-8989
investor_relations@epam.com

EPAM SYSTEMS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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EPAM SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

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EPAM SYSTEMS, INC. AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
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(In thousands, except per share amounts and percentages)

 

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