UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2013
VIRTUSA CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware |
|
001-33625 |
|
04-3512883 |
(State or Other Jurisdiction |
|
(Commission |
|
(IRS Employer |
of Incorporation |
|
File Number) |
|
Identification No.) |
2000 West Park Drive |
|
|
Westborough, Massachusetts |
|
01581 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrants telephone number, including area code: (508) 389-7300
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On May 8, 2013, Virtusa Corporation (the Company) announced its financial results for the fourth quarter and fiscal year 2013 ended March 31, 2013. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K (including Exhibit 99.1) shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:
99.1 Press Release issued by Virtusa Corporation on May 8, 2013.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Virtusa Corporation | |
|
| |
Date: May 8, 2013 |
By: |
/s/ Ranjan Kalia |
|
|
Ranjan Kalia |
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 99.1
Virtusa Announces Record Fourth Quarter and Full Year Fiscal 2013 Consolidated Financial Results
· Fourth quarter fiscal 2013 revenue of $89.9 million increased 4% sequentially and 21% year-over-year. Fourth quarter fiscal 2013 diluted EPS increased to $0.35, compared to diluted EPS of $0.23 for the year ago period.
· Full year fiscal 2013 revenue of $333.2 million increased 20% year-over-year.
· Income from operations for the full year fiscal 2013 increased 37% to $32.9 million.
· Full year fiscal 2013 diluted EPS increased 40% to $1.11, compared to diluted EPS of $0.79 for the full year fiscal 2012.
Westborough, MA (May 8, 2013) Virtusa Corporation (NASDAQ: VRTU), a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to transform the customer experience, today reported consolidated financial results for the fourth quarter and fiscal year 2013, ended March 31, 2013.
Fourth Quarter Fiscal 2013 Consolidated Financial Results
Revenue for the fourth quarter of fiscal 2013 was $89.9 million, an increase of 4% sequentially and 21% year-over-year in reported currency. On a constant currency basis,(1) fourth quarter revenue increased 5% sequentially and 22% year-over-year.
Virtusa reported income from operations of $9.4 million for the fourth quarter of fiscal 2013, an increase compared to $9.1 million for the third quarter of fiscal 2013, and an increase compared to $7.1 million for the fourth quarter of fiscal 2012.
Net income for the fourth quarter of fiscal 2013 was $9.1 million, or $0.35 per diluted share, an increase compared to $7.4 million, or $0.29 per diluted share, for the third quarter of fiscal 2013, and an increase compared to $5.8 million, or $0.23 per diluted share, for the fourth quarter of fiscal 2012.
Fiscal Year 2013 Consolidated Financial Results
For the fiscal year ended March 31, 2013, revenue increased 20% in both reported and constant currency, to a record $333.2 million, compared to $277.8 million for the fiscal year ended March 31, 2012.
Virtusa reported income from operations of $32.9 million for fiscal year 2013, an increase of 37% compared to $23.9 million for fiscal year 2012.
Net income for fiscal year 2013 was $28.4 million, or $1.11 per diluted share, an increase compared to $20.0 million, or $0.79 per diluted share, for fiscal year 2012.
The Company ended fiscal year 2013 with $95.0 million of cash, cash equivalents, and short-term and long-term investments.(2) Cash generated from operations was $22.0 million for fiscal year 2013.
Kris Canekeratne, Virtusas Chairman and CEO, stated, The fourth quarter capped off a strong fiscal year 2013 for Virtusa. Our industry leading growth was driven by our ability to provide thought leadership at the intersection of business and technology in the industries we serve. Our leadership position in Millennial Enablement, regulatory and compliance services, transformational solutions and IT rationalization has been at the core of winning larger engagements and expanding client relationships.
Ranjan Kalia, Chief Financial Officer, said, We are pleased with our results for the full fiscal year 2013 which delivered on our promise of above market revenue growth and significant operating margin expansion. Mr. Kalia added, Our full fiscal year 2014 guidance calls for continued revenue momentum along with meaningful earnings per share growth.
Financial Outlook
Virtusa management provided the following current financial guidance:
· First quarter fiscal year 2014 revenue is expected to be in the range of $89.5 to $91.5 million, with diluted EPS of $0.26 to $0.30.
· Fiscal year 2014 revenue is expected to be in the range of $376.0 to $392.0 million, with diluted EPS of $1.22 to $1.38.
The Companys first quarter and fiscal year 2014 diluted EPS estimates assume an average share count of approximately 26.1 million and 26.2 million respectively, (assuming no further exercises of stock-based awards) and assume a stock price of $22.79, which was derived from the average closing price of the Companys stock over the five trading days ended on May 7, 2013. Deviations from this stock price may cause actual EPS to vary based on share dilution from Virtusas stock options and stock appreciation rights.
Conference Call and Webcast
Virtusa will host a conference call today, May 8, 2013 at 5:00 pm Eastern time to discuss the Companys fourth quarter and full fiscal year 2013 financial results, current financial guidance, and other corporate developments. To access this call, dial 800-946-0712 (domestic) or 719-325-2207 (international). The passcode is 9902153. A replay of this conference call will be available through May 16, 2013 at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 9902153. A live webcast of this conference call will be available on the Investors
page of the Companys website (www.virtusa.com), and a replay will be archived on the website as well.
About Virtusa
Virtusa (NASDAQ: VRTU) is a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to transform the customer experience. Virtusa helps its clients accelerate business outcomes by consolidating, rationalizing and modernizing customer-facing processes into one or more enterprise platforms.
Virtusa delivers cost-effective solutions through a global delivery model, applying advanced methods such as Platforming, Agile and Accelerated Solution Design to ensure that its solutions meet the clients requirements. As a result, its clients simultaneously reduce their IT operations cost while increasing their ability to meet changing business needs.
Founded in 1996 and headquartered in Massachusetts, Virtusa has operations in North America, Europe and Asia.
© 2011 All rights reserved. Virtusa, Accelerating Business OutcomesSM and all other related logos/service names are either registered trademarks or trademarks of Virtusa Corporation in the US, UK, EU, India and/or Sri Lanka. All other company and service names are the property of their respective holders.
Footnotes and Non-GAAP Financial Information
(1) To determine year-over-year constant currency revenue for the Companys fourth quarter of fiscal 2013, revenue from entities reporting in U.K. pound sterling was converted into U.S. dollars at the average exchange rate in effect for the three months ended March 31, 2012 of 1.58 U.S. dollars to U.K. pounds sterling, rather than the actual exchange rate in effect for the three months ended March 31, 2013 of 1.54 U.S. dollars to U.K. pounds sterling. To determine sequential revenue change in constant currency for the Companys fourth quarter of fiscal 2013, revenue from entities reporting in U.K. pounds sterling was converted into U.S. dollars at the average exchange rate in effect for the three months ended December 31, 2012 of 1.61 U.S. dollars to U.K. pounds sterling, rather than the actual exchange rate in effect for the three months ended March 31, 2013 of 1.54 U.S. dollars to U.K. pounds sterling.
(2) The Company considers the measure of cash, cash equivalents, short-term and long-term investments to be a more meaningful indicator of the Companys overall liquidity. All of the Companys investments are classified as available-for-sale, including the Companys long-term investments which consist of fixed income securities, including government agency bonds and municipal and corporate bonds, which meet the credit rating and diversification requirements of the Companys investment policy as approved by the Companys audit committee and board of directors.
This press release includes certain non-GAAP financial information as defined by Regulation G by the Securities and Exchange Commission. Virtusa presents constant
currency revenue to provide insights into, and a framework for assessing, how Virtusas revenue performed excluding the effect of foreign currency rate fluctuations (see footnote (1) above for further detail). Virtusa also presents a reconciliation of its cash, cash equivalents, short term and long term investments which it believes provides insight into its cash position and overall liquidity (see footnote (2) above for further detail). While Virtusas management believes that these non-GAAP revenue measures and cash reconciliation presentations are useful in evaluating Virtusas revenue and cash position and overall liquidity, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.
Forward-Looking Statements
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, Virtusas expectations concerning managements forecast of financial performance, the growth of our business and managements plans, objectives, and strategies. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond Virtusas control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: Virtusas dependence on a limited number of clients as well as clients located principally in the United States and United Kingdom and in concentrated industries; restrictions on immigration or changes in immigration laws; Virtusas ability to hire and retain enough sufficiently trained IT professionals to support its operations; Virtusas ability to expand its business or effectively manage growth; Virtusas ability to sustain profitability or maintain profitable engagements; increasing competition in the IT services outsourcing industry; Virtusas ability to attract and retain clients and meet their expectations; quarterly fluctuations in Virtusas earnings; client terminations or contracting delays, or delays in revenue recognition in any reporting period; Virtusas ability to successfully manage its billing and utilization rates and its targeted on-site to offshore delivery mix; Virtusas ability to assimilate and integrate the operations of acquired businesses; unanticipated acquisition related costs and negative effects on Virtusas reported results of operations from acquisition-related charges; Virtusas ability to achieve expected synergies and operating efficiencies in the acquisitions within expected time-frames or at all; technological innovation; Virtusas ability to effectively manage its facility, infrastructure and capacity needs; regulatory, legislative and judicial developments in Virtusas operations areas and Virtusaa ability to comply with changing or complex laws and maintain effective internal controls to ensure ongoing compliance; the loss of any key member of Virtusas senior management team, political or economic instability in India or Sri Lanka; any reduction or withdrawal of tax benefits provided to Virtusa by the governments of India and Sri Lanka, or new legislation by such governments which could be harmful to Virtusa; wage inflation and increases in government mandated benefits in India and Sri Lanka; telecommunications or technology disruptions; worldwide economic and business conditions; currency exchange rate fluctuations of the Indian and Sri Lankan rupee, the U.S. dollar and the U.K. pound sterling; and the volatility of the market price of Virtusas common stock.
Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Virtusa undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by Virtusa, see the disclosure contained in Virtusas public filings with the Securities and Exchange Commission, including Virtusas Annual Report on Form 10-K for the fiscal year ended March 31, 2012 and subsequent Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission.
Virtusa Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
|
|
March 31, 2013 |
|
March 31, 2012 |
| ||
Assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
57,199 |
|
$ |
58,105 |
|
Short-term investments |
|
29,452 |
|
23,055 |
| ||
Accounts receivable, net |
|
68,612 |
|
58,789 |
| ||
Unbilled accounts receivable |
|
15,702 |
|
7,634 |
| ||
Prepaid expenses |
|
7,562 |
|
7,759 |
| ||
Deferred income taxes |
|
7,674 |
|
8,470 |
| ||
Restricted cash |
|
350 |
|
2,828 |
| ||
Other current assets |
|
8,333 |
|
5,831 |
| ||
Total current assets |
|
194,884 |
|
172,471 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
|
36,775 |
|
32,843 |
| ||
Long-term investments |
|
8,319 |
|
4,269 |
| ||
Deferred income taxes |
|
9,275 |
|
8,348 |
| ||
Goodwill |
|
35,472 |
|
35,472 |
| ||
Intangible assets, net |
|
15,692 |
|
18,248 |
| ||
Other long-term assets |
|
3,502 |
|
3,143 |
| ||
Total assets |
|
$ |
303,919 |
|
$ |
274,794 |
|
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
| ||
Accounts payable |
|
$ |
9,231 |
|
$ |
8,649 |
|
Accrued employee compensation and benefits |
|
17,683 |
|
17,844 |
| ||
Accrued expenses and other current liabilities |
|
17,811 |
|
22,011 |
| ||
Income taxes payable |
|
4,509 |
|
4,954 |
| ||
Total current liabilities |
|
49,234 |
|
53,458 |
| ||
Long-term liabilities |
|
2,478 |
|
3,162 |
| ||
Total liabilities |
|
51,712 |
|
56,620 |
| ||
|
|
|
|
|
| ||
Stockholders equity |
|
252,207 |
|
218,174 |
| ||
Total liabilities and stockholders equity |
|
$ |
303,919 |
|
$ |
274,794 |
|
Virtusa Corporation and Subsidiaries
Consolidated Statements of Income
(In thousands except share and per share amounts, unaudited)
|
|
Three Months Ended |
|
Year Ended |
| ||||||||
|
|
March 31, |
|
March 31, |
| ||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
89,949 |
|
$ |
74,231 |
|
$ |
333,175 |
|
$ |
277,771 |
|
Costs of revenue |
|
57,672 |
|
47,786 |
|
215,866 |
|
177,434 |
| ||||
Gross profit |
|
32,277 |
|
26,445 |
|
117,309 |
|
100,337 |
| ||||
Total operating expenses |
|
22,858 |
|
19,378 |
|
84,450 |
|
76,438 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income from operations |
|
9,419 |
|
7,067 |
|
32,859 |
|
23,899 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
743 |
|
716 |
|
2,977 |
|
2,478 |
| ||||
Foreign currency transaction gains (losses) |
|
176 |
|
291 |
|
(68 |
) |
227 |
| ||||
Other, net |
|
26 |
|
(85 |
) |
91 |
|
(158 |
) | ||||
Total other income (expense) |
|
945 |
|
922 |
|
3,000 |
|
2,547 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income tax expense |
|
10,364 |
|
7,989 |
|
35,859 |
|
26,446 |
| ||||
Income tax expense |
|
1,272 |
|
2,191 |
|
7,461 |
|
6,411 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
9,092 |
|
$ |
5,798 |
|
$ |
28,398 |
|
$ |
20,035 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per share of common stock: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
0.36 |
|
$ |
0.23 |
|
$ |
1.14 |
|
$ |
0.81 |
|
Diluted |
|
$ |
0.35 |
|
$ |
0.23 |
|
$ |
1.11 |
|
$ |
0.79 |
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
25,086,734 |
|
24,757,310 |
|
24,937,162 |
|
24,643,063 |
| ||||
Diluted |
|
25,936,859 |
|
25,483,096 |
|
25,638,839 |
|
25,383,650 |
|
Virtusa Corporation and Subsidiaries
Consolidated Statement of Cash Flows
(In thousands, unaudited)
|
|
Year Ended |
| ||||
|
|
March 31, |
| ||||
|
|
2013 |
|
2012 |
| ||
Cash flows provided by operating activities: |
|
|
|
|
| ||
Net income |
|
$ |
28,398 |
|
$ |
20,035 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
|
9,040 |
|
8,305 |
| ||
Share-based compensation expense |
|
5,876 |
|
5,102 |
| ||
Provision for doubtful accounts |
|
193 |
|
602 |
| ||
(Gain) loss on disposal of property and equipment |
|
(100 |
) |
16 |
| ||
Deferred income taxes, net |
|
(2,302 |
) |
(1,778 |
) | ||
Foreign currency loss (gain) , net |
|
68 |
|
(227 |
) | ||
Excess tax benefits from stock option exercises |
|
(759 |
) |
(1,422 |
) | ||
Net changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable and unbilled receivable |
|
(19,462 |
) |
(17,883 |
) | ||
Prepaid expenses and other current assets |
|
(3,501 |
) |
(3,196 |
) | ||
Other long-term assets |
|
6,617 |
|
(2,805 |
) | ||
Accounts payable |
|
805 |
|
1,579 |
| ||
Accrued employee compensation and benefits |
|
(1,440 |
) |
4,088 |
| ||
Accrued expenses and other current liabilities |
|
3,883 |
|
3,983 |
| ||
Income taxes payable |
|
(5,130 |
) |
5,188 |
| ||
Other long-term liabilities |
|
(232 |
) |
(670 |
) | ||
Net cash provided by operating activities |
|
21,954 |
|
20,917 |
| ||
Cash flows used for investing activities: |
|
|
|
|
| ||
Proceeds from sale of property and equipment |
|
117 |
|
114 |
| ||
Purchase of short-term investments |
|
(13,676 |
) |
(9,481 |
) | ||
Proceeds from sale or maturity of short-term investments |
|
12,717 |
|
36,825 |
| ||
Purchase of long-term investments |
|
(11,303 |
) |
(5,900 |
) | ||
Proceeds from sale or maturity of long-term investments |
|
1,258 |
|
10,406 |
| ||
Business acquisition, net of cash acquired |
|
(2,775 |
) |
(25,055 |
) | ||
Decrease (increase) in restricted cash |
|
2,544 |
|
(2,645 |
) | ||
Purchase of property and equipment |
|
(11,788 |
) |
(13,557 |
) | ||
Net cash used for investing activities |
|
(22,906 |
) |
(9,293 |
) | ||
Cash flows provided by financing activities: |
|
|
|
|
| ||
Proceeds from exercise of common stock options |
|
2,169 |
|
1,962 |
| ||
Purchase of treasury stock |
|
(1,408 |
) |
|
| ||
Payment of contigent consideration related to acquisitions |
|
|
|
(1,620 |
) | ||
Principal payments on capital lease obligation |
|
(1,026 |
) |
(932 |
) | ||
Excess tax benefits from stock option exercises |
|
759 |
|
1,422 |
| ||
Net cash provided by financing activities |
|
494 |
|
832 |
| ||
Effect of exchange rate changes on cash and cash equivalents |
|
(448 |
) |
(4,569 |
) | ||
Net increase in cash and cash equivalents |
|
(906 |
) |
7,887 |
| ||
Cash and cash equivalents, beginning of period |
|
58,105 |
|
50,218 |
| ||
Cash and cash equivalents, end of period |
|
$ |
57,199 |
|
$ |
58,105 |
|
|
|
|
|
|
| ||
|
|
|
|
|
| ||
Supplemental Non-GAAP Financial Information as of March 31, 2013 and 2012 |
|
|
|
|
| ||
|
|
|
|
|
| ||
Reconciliation to total cash and cash equivalents, short-term investments and long-term investments: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Cash and cash equivalents, end of period |
|
$ |
57,199 |
|
$ |
58,105 |
|
|
|
|
|
|
| ||
Short-term investments |
|
29,452 |
|
23,055 |
| ||
Long-term investments |
|
8,319 |
|
4,269 |
| ||
Total short-term and long-term investments, end of period |
|
37,771 |
|
27,324 |
| ||
|
|
|
|
|
| ||
Total cash and cash equivalents, short-term investments and long-term investments |
|
$ |
94,970 |
|
$ |
85,429 |
|
Media Contact:
Andrea LePain
Greenough
617-275-6516
alepain@greenough.biz
Investor Contact:
Staci Strauss Mortenson
ICR
203-682-8273
staci.mortenson@icrinc.com