Genpact 2 nd Quarter 2013 Earnings Presentation August 6, 2013 Ticker (NYSE: G) Exhibit 99.2 |
Forward Looking Statements These materials contain certain statements concerning our future growth prospects and forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on Genpact’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties include but are not limited to a slowdown in the economies and sectors in which our clients operate, a slowdown in the BPM and IT Services sectors, the risks and uncertainties arising from our past and future acquisitions, our ability to manage growth, factors which may impact our cost advantage, wage increases, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including the Company's Annual Report on Form 10-K. These filings are available at www.sec.gov or on the investor relations section of our website, www.genpact.com. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the SEC. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company. These materials also include measures defined by the SEC as non-GAAP financial measures. Genpact believes that these non-GAAP measures can provide useful supplemental information to investors regarding financial and business trends relating to its financial condition and results of operations when read in conjunction with the Company’s reported results. Reconciliations of these non-GAAP measures to GAAP are available in this presentation and in our earnings release dated August 6, 2013. Non-GAAP Financial Measures |
3 Solid 2 nd Quarter 2013 We continue to deliver consistent growth which is a reflection of our differentiated, diversified and resilient business model Q2 ‘13 versus Q2 ‘12 performance: Total Revenue: +14% Revenue from Global Clients: +20% GE Revenue: -1% Adjusted Operating Income (1) : +15% Adjusted Operating Income margin (1) of 16.7% Broad-based growth across industry verticals and service offerings Smart Decision Services resumed growth Continued to significantly expand client relationships Notes: 1) Adjusted Operating Income is a Non-GAAP Measure. GAAP Operating Income increased 23.5% and GAAP Operating Margin was 15%. |
4 Expanding Client Relationships Notes: 1) Relationship size = Clients representing annual revenues based on rolling four quarters 41 11 10 55 14 12 0 10 20 30 40 50 60 $5 to $15 MM $15 to $25 MM >$25 MM Relationship Size (1) Q2 12 Q2 13 |
5 Our Strategy is Resonating With Clients Lead Guide global enterprises to best-in-class through our proprietary SEP SM framework Example: Selected by large global industrial company to improve its aftermarket services organization and processes Expand Invest in targeted industry verticals and domain expertise Example: Won an ITO engagement, leveraging our deep expertise in the CPG vertical, processes and technology Allocate Allocate capital and resources to support sustainable, profitable growth and shareholder value Example: Integrated recent acquisition that provided deep domain expertise in the attractive, high-growth Healthcare market Deliver Execute seamlessly for clients across service lines and geographies Example: Engaged by large, existing Pharma client to improve end- consumer experience |
6 Macro-Environment Mixed; Pipeline Healthy Macro-environment continues to be mixed Challenges in some geographies and industries, improving in others Pipeline remains healthy and stable with uptick in larger, transformative deals U.S. and Europe strong Growth across verticals led by Capital Markets, CPG, Life Sciences and BFS Services led by F&A, ITO and Banking Operations Increased share of large deals in pipeline; extends cycle times Win rates steady; pricing competitive but stable Clients’ continued focus on improving business models leading to more transformative discussions |
7 Revenue Growth of 14.4% Driven by Global Clients Q2 2013 Global Clients Business Process Management revenues increased 18% while ITO revenues increased 25% Q2 2013 GE Growth in ITO more than offset by decline in Business Process Management H1 2013 revenue at $1.039 billion; up 15.0% year over year Global Clients (1) GE (1) BPM ITO 14.4% YoY Growth% 19.8% (0.9)% 14.4% 20.9% 12.4% YoY Growth% $467.6 $534.8 Q2 ‘12 Q2 ‘13 Q2 ‘12 Q2 ‘13 357.6 401.8 110.0 133.0 $467.6 $534.8 122.8 344.9 121.6 413.2 ($ in millions) Notes: 1) Data adjusted for divestitures from GE ($ in millions) |
8 Adjusted Income From Operations Growth of 14.6% Q2 ‘12 Q2 ‘13 YoY Growth Revenue $467.6 $534.8 14.4% Cost Of Revenue 285.2 332.7 16.7% Gross Profit 182.4 202.1 10.8% Gross Profit % of Revenue 39.0% 37.8% (120)bps Selling, general and administrative expenses 114.3 118.4 3.6% SG&A % of Revenue 24.4% 22.1% (230)bps Adjusted Income From Operations (1) 77.8 89.2 14.6% Adjusted Income From Operations Margin % 16.6% 16.7% 10 bps Notes: ($ millions) 1) Adjusted Operating Income is a Non-GAAP Measure. Income from Operations was $63.2 million in Q2 ‘12 and $78.0 million in Q2 ’13 |
9 EPS Bridge 27 4 Adjusted Income from Operations Q2 ‘12 GAAP EPS Q2 ‘12 Q2 ‘13 Adjusted Net Income ($ millions) 72.6 74.7 Diluted Shares Outstanding (millions) (3) 228 235 (2) (2) Higher Interest Income/ Others 27 (1) 1 Lesser Fx Re- measurement Gains Incremental Interest due to previous debt facility One-time write off due to Q2 ‘13 refinance (2) Total Net Interest Expense-(2) (Cents per share) Net other Adjustments (1) 32 32 5 5 Net other Adjustments (1) Q2 ‘12 Adjusted EPS Q2 ‘13 Adjusted EPS Q2 ‘13 GAAP EPS Increase Decrease Notes: - The above bridge reflects only significant variance items year over year - EPS = Diluted earnings per share 1) Adjustments primarily include amortization of intangibles relating to acquisition and share-based compensation expenses. 2) One-time write off relating to upfront fees and payment for early termination of previous debt facility 3) Weighted average number of diluted shares outstanding |
10 Strong Cash Flow From Operations One-time upfront client payment distorting year-over-year comparison Normalizing for upfront client payment, 2 quarter cash flow from operations declined 7% due to: • Accelerated payments from clients in the 1 quarter 2013 • Timing of employee bonus payments across quarter-end 82 45 Q2 ‘12 Q2 ‘13 (40)% (7)% Operating Performance Upfront Client Payment (One-time) $127 $76 76 YoY Growth% ($ in millions) Q2 ‘12 Q2 ‘13 Days sales outstanding 82 80 Cash and Liquid Assets ($ millions) (1) 442 536 Notes: 1) Cash and Liquid Assets = Cash and Cash equivalents and short-term deposits nd st H1 ‘12 H1 ‘13 $132 $108 (18)% 24% YoY Growth% 87 45 108 ($ in millions) |
11 Genpact Helps Clients Navigate Change Our focus: Build on strong position in large, under-penetrated target markets Refine and consistently implement our growth strategy Differentiate our capabilities and expertise in our targeted vertical markets Deliver clear measurable business impact for clients |
Q&A |
13 Annexure 1: Reconciliation of Adjusted Income from Operations (USD, In Thousands) 2012 2013 Income from operations as per GAAP $ 63,167 $ 77,988 Add: Amortization of acquired intangible assets resulting from Formation Accounting 1,755 767 Add: Amortization of acquired intangible assets relating to acquisitions 2,627 4,087 Add: Consultancy and legal fees relating to change of shareholding and capital restructuring 1,687 - Add: Stock based compensation 9,980 10,093 Add: Other income (expense) 322 (2,236) Less: Equity-method investment activity, net (13) 63 Less: Net income attributable to noncontrolling interest (1,699) (1,586) Adjusted income from operations $ 77,826 $ 89,176 Three months ended June 30 |
14 Annexure 2: Reconciliation of Adjusted Net Income (USD, In Thousands, except per share data) 2012 2013 Net income as per GAAP $ 61,100 $ 63,876 Add: Amortization of acquired intangible assets resulting from Formation Accounting 1,755 767 Add: Amortization of acquired intangible assets relating to acquisitions 2,627 4,087 Add: Stock based compensation 9,980 10,093 Add: Consultancy and legal fees relating to change of shareholding and capital restructuring 1,687 - Less: Tax impact on amortization of acquired intangibles resulting from Formation Accounting (366) (158) Less: Tax impact on amortization of acquired intangibles relating from acquisitions (902) (1,394) Less: Tax Impact on stock based compensation (3,059) (2,605) Less: Tax impact on consultancy and legal fees relating to change of shareholding and capital restructuring (182) - Adjusted net income $ 72,640 $ 74,666 Adjusted diluted earnings per share $ 0.32 $ 0.32 Three months ended June 30 |
Thank You |