g-8k_20200806.htm
false 0001398659 0001398659 2020-08-06 2020-08-06

 

 

 

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): August 6, 2020

 

GENPACT LIMITED

(Exact name of registrant as specified in its charter)

 

 

Bermuda

001-33626

98-0533350

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

Victoria Place, 5th Floor, 31 Victoria Street

Hamilton HM 10, Bermuda

(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (441) 294-8000

Not Applicable

(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:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common shares, par value $0.01 per share

G

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


 

Item 2.02

Results of Operations and Financial Condition.

On August 6, 2020, Genpact Limited (the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2020.  The Company is furnishing this Form 8-K pursuant to Item 2.02, “Results of Operations and Financial Condition.” A copy of the press release, attached hereto as Exhibit 99.1, is incorporated herein by reference.

The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

The Company is making reference to non-GAAP financial information in the press release and on the conference call.  A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the attached press release.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits:

 

Exhibit 99.1

  

Press release dated August 6, 2020

Exhibit 104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 


 

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.

 

 

 

GENPACT LIMITED

 

 

 

 

 

Date: August 6, 2020

 

By:

 

/s/ Heather D. White

 

 

Name:

 

Heather D. White

 

 

Title:

 

Senior Vice President, Chief Legal Officer and Secretary

 

 

g-ex991_6.htm

Exhibit 99.1

 

Genpact Reports Second Quarter 2020 Results

Total Revenue of $900 million, Up 2% (3% on a constant currency basis)1

Global Client Revenue of $783 million, Up 3% (4% on a constant currency basis)1

Diluted EPS of $0.32, Down 16%; Adjusted Diluted EPS2 of $0.52, Up 6%

NEW YORK, August 6, 2020 — Genpact Limited (NYSE: G), a global professional services firm focused on delivering digital transformation, today announced financial results for the second quarter ended June 30, 2020.

 

“Our second quarter results were much stronger than expected in light of the unprecedented environment the world is facing. Our performance was driven by incredibly strong execution by our teams on many fronts as well as the resilience of our business model and the strategic choices we have made over many years,” said Tiger” Tyagarajan, Genpact’s president and CEO. “With our clients’ heightened focus on driving digital transformation, the last several months have demonstrated that our deep domain depth and process expertise as well as our investments in digital and analytics give us a competitive advantage.”

Key Financial Results – Second Quarter 2020

Total revenue was $900 million, up 2% year-over-year (3% on a constant currency basis).1

Revenue from Global Clients was $783 million, up 3% year-over-year (4% on a constant currency basis),1 representing 87% of total revenue.

Revenue from GE was $117 million, down 2% year-over-year, representing 13% of total revenue.

Net income was $62 million, down 16% year-over-year, with a corresponding margin of 6.9%.  

Income from operations was $90 million, down 15% year-over-year, with a corresponding margin of 10.0%.   Adjusted income from operations was $145 million, up 7% year-over-year, with a corresponding margin of 16.2%.3

Diluted earnings per share was $0.32, down 16% year-over-year, and adjusted diluted earnings per share2 was $0.52, up 6% year-over-year.

Income from operations and diluted earnings per share include a $22 million restructuring charge related to employee severance costs and lease impairment charges. This restructuring charge is excluded from adjusted income from operations3 and adjusted diluted earnings per share.2

Cash generated from operations was $192 million, compared to $126 million in the second quarter of 2019.

 

1 

Revenue growth on a constant currency basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates adjusted for hedging gains/losses in such period.

2 

Adjusted diluted earnings per share is a non-GAAP measure.  A reconciliation of GAAP diluted earnings per share to adjusted diluted earnings per share is attached to this release.

3 

Adjusted income from operations and adjusted income from operations margin are non-GAAP measures. Reconciliations of each of GAAP income from operations and GAAP net income to adjusted income from operations and GAAP income from operations margin and GAAP net income margin to adjusted income from operations margin are attached to this release.

 

 


 

2020 Outlook

 

Genpact is providing the following full-year guidance:

Total revenue for the full year of $3.63 to $3.67 billion, up 3% to 4% or 3.5% to 5% on a constant currency basis.1  

Global Client revenue growth in the range of 5% to 6%, or 5% to 6.5% on a constant currency basis.1

Adjusted income from operations margin4 of approximately 15.5%.

Adjusted diluted EPS5 of $2.03 to $2.07.

Conference Call to Discuss Financial Results

Genpact’s management will host an hour-long conference call beginning at 4:30 p.m. ET on August 6, 2020 to discuss the company’s performance for the second quarter ended June 30, 2020. To participate, callers can dial +1 (877) 654-0173 from within the U.S. or +1 (281) 973-6289 from any other country. Callers will be prompted to enter the conference ID, 7988313.

A live webcast of the call will also be made available on the Genpact Investor Relations website at https://www.genpact.com/investors. For those who cannot join the call live, a replay will be archived on the Genpact website after the end of the call. A transcript of the call will also be made available on the website.

 

4 

Adjusted income from operations margin is a non-GAAP measure.  A reconciliation of the outlook for each of GAAP income from operations margin and GAAP net income margin to adjusted income from operations margin is attached to this release.

5 

Adjusted diluted earnings per share is a non-GAAP measure.  A reconciliation of the outlook for GAAP diluted earnings per share to adjusted diluted earnings per share is attached to this release.

 


 

About Genpact

Genpact (NYSE: G) is a global professional services firm that makes business transformation real. We drive digital-led innovation and digitally-enabled intelligent operations for our clients, guided by our experience running thousands of processes primarily for Global Fortune 500 companies. We think with design, dream in digital, and solve problems with data and analytics.  Combining our expertise in end-to-end operations and our AI-based platform, Genpact Cora, we focus on the details – all 90,000+ of us. From New York to New Delhi and more than 30 countries in between, we connect every dot, reimagine every process, and reinvent companies’ ways of working. We know that reimagining each step from start to finish creates better business outcomes. Whatever it is, we’ll be there with you – accelerating digital transformation to create bold, lasting results – because transformation happens here.

Safe Harbor

This press release contains certain statements concerning our future growth prospects and financial results and other forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. 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, uncertainties, and other factors include but are not limited to the impact of the COVID-19 pandemic on our business, the health and safety of our employees, clients and our partners and suppliers, as well as the physical and economic impacts of the various recommendations, orders and protocols issued by local and national governmental agencies in light of the evolving situation, a slowdown in the economies and sectors in which our clients operate, a slowdown in the business process outsourcing or information technology services sectors, our ability to develop and successfully execute our business strategies, the risks and uncertainties arising from our past and future acquisitions, our ability to convert bookings to revenues, our ability to manage growth, factors which may impact our cost advantage, wage increases, changes in tax rates and tax legislation and other laws and regulations, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, foreign currency fluctuations, general economic conditions affecting our industry, political, economic or business conditions in countries in which we operate, including the uncertainty relating to the withdrawal of the United Kingdom from the European Union, commonly known as Brexit, as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. These filings are available at www.sec.gov. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management's current analysis of future events and should not be relied upon as representing management's expectations or beliefs as of any date subsequent to the time they are made. Genpact undertakes no obligation to update any forward-looking statements that may be made from time to time by or on behalf of Genpact.

Contacts

 

Investors

  

Roger Sachs, CFA

 

  

+1 (203) 808-6725

 

  

roger.sachs@genpact.com

 

 

Media

  

Michael Schneider

+1 (217) 260-5041

michael.schneider@genpact.com

 

 


 

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share data and share count)

 

 

As of December 31,

 

 

As of June 30,

 

 

 

2019

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

467,096

 

 

$

867,363

 

Accounts receivable, net of reserve for doubtful receivables of $29,969 and allowance for credit losses of $31,903 as of December 31, 2019 and June 30, 2020, respectively

 

 

914,255

 

 

 

868,781

 

Prepaid expenses and other current assets

 

 

170,325

 

 

 

180,083

 

Total current assets

 

$

1,551,676

 

 

$

1,916,227

 

Property, plant and equipment, net

 

 

254,035

 

 

 

233,758

 

Operating lease right-of-use assets

 

 

330,854

 

 

 

350,818

 

Deferred tax assets

 

 

89,715

 

 

 

102,973

 

Intangible assets, net

 

 

230,861

 

 

 

195,594

 

Goodwill

 

 

1,574,466

 

 

 

1,557,011

 

Contract cost assets

 

 

205,498

 

 

 

210,752

 

Other assets, net of reserve for doubtful assets of $0 and allowance for credit losses of $2,566 as of December 31, 2019 and June 30, 2020, respectively

 

217,079

 

 

 

278,953

 

Total assets

 

$

4,454,184

 

 

$

4,846,086

 

 

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Short-term borrowings

 

$

70,000

 

 

$

495,000

 

Current portion of long-term debt

 

 

33,509

 

 

 

33,523

 

Accounts payable

 

 

21,981

 

 

 

19,182

 

Income taxes payable

 

 

43,186

 

 

 

65,592

 

Accrued expenses and other current liabilities

 

 

683,871

 

 

 

606,473

 

Operating leases liability

 

 

57,664

 

 

 

63,546

 

Total current liabilities

 

$

910,211

 

 

$

1,283,316

 

Long-term debt, less current portion

 

 

1,339,796

 

 

 

1,323,583

 

Operating leases liability

 

 

302,100

 

 

 

325,692

 

Deferred tax liabilities

 

 

3,990

 

 

 

3,358

 

Other liabilities

 

 

208,916

 

 

 

249,523

 

Total liabilities

 

$

2,765,013

 

 

$

3,185,472

 

Shareholders’ equity

 

 

 

 

 

 

 

 

Preferred shares, $0.01 par value, 250,000,000 authorized, none issued

 

 

 

 

Common shares, $0.01 par value, 500,000,000 authorized,

190,118,181 and 190,721,373 issued and outstanding as of December 31, 2019 and June 30, 2020, respectively

 

 

1,896

 

 

 

1,903

 

Additional paid-in capital

 

 

1,570,575

 

 

 

1,590,017

 

Retained earnings

 

 

648,656

 

 

 

710,382

 

Accumulated other comprehensive income (loss)

 

 

(531,956)

 

 

 

(641,688)

 

Total equity

 

$

1,689,171

 

 

$

1,660,614

 

Total liabilities and equity

 

$

4,454,184

 

 

$

4,846,086

 

 

 

 


 

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data and share count)

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

Net revenues

 

$

881,799

 

 

$

900,094

 

 

$

1,691,005

 

 

$

1,823,286

 

Cost of revenue

 

 

571,244

 

 

 

593,892

 

 

 

1,090,381

 

 

 

1,198,663

 

Gross profit

 

$

310,555

 

 

$

306,202

 

 

$

600,624

 

 

$

624,623

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

196,312

 

 

 

186,312

 

 

 

387,714

 

 

 

383,654

 

Amortization of acquired intangible assets

 

 

8,096

 

 

 

10,697

 

 

 

16,605

 

 

 

21,438

 

Other operating (income) expense, net

 

 

(55

)

 

 

18,829

 

 

 

31

 

 

 

18,509

 

Income from operations

 

$

106,202

 

 

$

90,364

 

 

$

196,274

 

 

$

201,022

 

Foreign exchange gains (losses), net

 

 

351

 

 

 

(518

)

 

 

(3,081

)

 

 

14,013

 

Interest income (expense), net

 

 

(12,143

)

 

 

(13,619

)

 

 

(23,266

)

 

 

(25,315

)

Other income (expense), net

 

 

560

 

 

 

2,920

 

 

 

4,363

 

 

 

(14

)

Income before equity-method investment activity, net and income tax expense

 

$

94,970

 

 

$

79,147

 

 

$

174,290

 

 

$

189,706

 

Equity-method investment activity, net

 

 

(15

)

 

 

-

 

 

 

(11

)

 

 

 

Income before income tax expense

 

$

94,955

 

 

$

79,147

 

 

$

174,279

 

 

$

189,706

 

Income tax expense

 

 

21,233

 

 

 

16,986

 

 

 

39,716

 

 

 

41,847

 

Net income

 

$

73,722

 

 

$

62,161

 

 

$

134,563

 

 

$

147,859

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.39

 

 

$

0.33

 

 

$

0.71

 

 

$

0.78

 

Diluted

 

$

0.38

 

 

$

0.32

 

 

$

0.69

 

 

$0. 76

 

Weighted average number of common shares used in computing earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

190,163,359

 

 

 

190,541,148

 

 

 

189,807,602

 

 

 

190,583,953

 

Diluted

 

 

194,766,047

 

 

 

195,112,549

 

 

 

194,080,127

 

 

 

195,822,531

 

 

 


 

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Six months ended June 30,

 

 

 

2019

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

134,563

 

 

$

147,859

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

45,708

 

 

 

58,165

 

Amortization of debt issuance costs (including loss on extinguishment of debt)

 

 

864

 

 

 

1,121

 

Amortization of acquired intangible assets

 

 

16,605

 

 

 

21,438

 

Write-down of intangible assets and property, plant and equipment

 

 

3,511

 

 

 

9,973

 

Reserve for doubtful receivables/allowance for credit losses

 

 

4,881

 

 

 

1,055

 

Unrealized loss (gain) on revaluation of foreign currency asset/liability

 

 

3,107

 

 

 

4,085

 

Stock-based compensation expense

 

 

39,987

 

 

 

36,331

 

Deferred income taxes

 

 

(4,242

)

 

 

(3,416

)

Write-down of operating lease right-of-use assets and other assets

 

 

-

 

 

 

10,244

 

Others, net

 

 

(4,076

)

 

 

(1,297

)

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) decrease in accounts receivable

 

 

(86,329

)

 

 

38,783

 

Increase in prepaid expenses, other current assets, contract cost assets operating lease right-of-use assets and other assets

 

 

(68,115

)

 

 

(137,605

)

Decrease in accounts payable

 

 

(17,407

)

 

 

(4,418

)

Increase (decrease) in accrued expenses, other current liabilities, operating lease liabilities and other liabilities

 

 

23,730

 

 

 

(32,371

)

Increase in income taxes payable

 

 

28,255

 

 

 

23,112

 

Net cash provided by operating activities

 

$

121,042

 

 

$

173,059

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(30,392

)

 

 

(33,127

)

Payment for internally generated intangible assets (including intangibles under development)

 

 

(16,501

)

 

 

(6,449

)

Proceeds from sale of property, plant and equipment

 

 

1,562

 

 

 

388

 

Payment for business acquisitions, net of cash acquired

 

 

(6,305

)

 

 

-

 

Net cash used for investing activities

 

$

(51,636

)

 

$

(39,188

)

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Repayment of finance lease obligations

 

 

(4,102

)

 

 

(4,065

)

Payment of debt issuance costs

 

 

-

 

 

 

(620

)

Repayment of long-term debt

 

 

(17,000

)

 

 

(17,000

)

Proceeds from short-term borrowings

 

 

50,000

 

 

 

455,000

 

Repayment of short-term borrowings

 

 

(55,000

)

 

 

(30,000

)

Proceeds from issuance of common shares under stock-based compensation plans

 

 

11,477

 

 

 

12,420

 

Payment for net settlement of stock-based awards

 

 

(2,729

)

 

 

(29,414

)

Payment of earn-out consideration

 

 

(10,470

)

 

 

-

 

Dividend paid

 

 

(32,307

)

 

 

(37,138

)

Payment for stock repurchased and retired (including expenses related to stock repurchase)

 

 

-

 

 

 

(45,021

)

Net cash (used for) provided by financing activities

 

$

(60,131

)

 

$

304,162

 

Effect of exchange rate changes

 

 

359

 

 

 

(37,766

)

Net increase in cash and cash equivalents

 

 

9,275

 

 

 

438,033

 

Cash and cash equivalents at the beginning of the period

 

 

368,396

 

 

 

467,096

 

Cash and cash equivalents at the end of the period

 

$

378,030

 

 

$

867,363

 

Supplementary information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

23,384

 

 

$

24,397

 

Cash paid during the period for income taxes, net of refund

 

$

37,060

 

 

$

95,834

 

 


 

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following non-GAAP financial measures:

 

Adjusted income from operations;

 

Adjusted income from operations margin;

 

Adjusted diluted earnings per share; and

 

Revenue growth on a constant currency basis.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Accordingly, these non-GAAP financial measures, the financial statements prepared in accordance with GAAP and the reconciliations of Genpact’s GAAP financial statements to such non-GAAP financial measures should be carefully evaluated.

Prior to July 2012, Genpact’s management used financial statements that excluded significant acquisition-related expenses, amortization of related acquired intangibles, and amortization of acquired intangibles recorded at the company’s formation in 2004 for its internal management reporting, budgeting and decision-making purposes, including comparing Genpact’s operating results to that of its competitors. However, considering Genpact’s frequent acquisitions of varying scale and size, and the difficulty in predicting expenses relating to acquisitions and the amortization of acquired intangibles thereof, since July 2012 Genpact’s management has used financial statements that exclude all acquisition-related expenses and amortization of acquired intangibles for its internal management reporting, budgeting and decision-making purposes, including comparing Genpact’s operating results to those of its competitors. For the same reasons, since April 2016 Genpact’s management has excluded the impairment of acquired intangible assets from the financial statements it uses for internal management purposes. Acquisition-related expenses are excluded in the period in which an acquisition is consummated.

Genpact’s management also uses financial statements that exclude stock-based compensation expense. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting ASC 718 “Compensation-Stock Compensation,” Genpact’s management believes that providing non-GAAP financial measures that exclude such expenses allows investors to make additional comparisons between Genpact’s operating results and those of other companies. During the second quarter of 2020, as a result of the COVID-19 pandemic the Company initiated restructuring measures and as a result, recorded a charge related to the following: i) right-of-use lease asset and other assets related to certain abandoned leased office properties, and ii) employee severance costs related to a focused reduction in Genpact’s workforce. Genpact’s management believes that excluding such charges provides useful measures to both management and investors regarding the Company’s financial performance and underlying business trends. Additionally, in its calculations of such non-GAAP financial measures, Genpact’s management has adjusted foreign exchange gains and losses, interest income and expense and income tax expenses from GAAP net income, and other income and expenses, and certain gains, losses and impairment charges attributable to equity-method investments from GAAP income from operations, because management believes that the Company’s results after taking into account these adjustments more accurately reflect the Company’s ongoing operations. In its calculations of adjusted diluted earnings per share, Genpact’s management has adjusted stock-based compensation expense, amortization and impairment of acquired intangible assets, acquisition-related expenses and restructuring expenses and the related tax impact of such adjustments from GAAP diluted earnings per share. For the purpose of calculating adjusted diluted earnings per share, the combined current and deferred tax effect is determined by multiplying each pre-tax adjustment by the applicable statutory income tax rate.

Genpact’s management provides information about revenues on a constant currency basis so that the revenues may be viewed without the impact of foreign currency exchange rate fluctuations compared to prior fiscal periods, thereby facilitating period-to-period comparisons of the Company’s true business performance. Revenue growth on a constant currency basis is calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates adjusted for hedging gains/losses in such period.

 


 

Accordingly, Genpact believes that the presentation of adjusted income from operations, adjusted income from operations margin, adjusted diluted earnings per share and revenue growth on a constant currency basis, when read in conjunction with the Company’s reported results, can provide useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations.

A limitation of using adjusted income from operations and adjusted income from operations margin versus income from operations, income from operations margin, net income and net income margin calculated in accordance with GAAP is that these non-GAAP financial measures exclude certain recurring costs and certain other charges, namely stock-based compensation and amortization and impairment of acquired intangibles. Management compensates for this limitation by providing specific information on the GAAP amounts excluded from adjusted income from operations and adjusted income from operations margin.

 


 


 

The following tables show the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures for the three and six months ended June 30, 2019 and 2020:

Reconciliation of Net income/Margin to Adjusted Income from Operations/Margin  

(Unaudited)

(In thousands)

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

Net income

 

$

73,722

 

 

$

62,161

 

 

$

134,563

 

 

$

147,859

 

Foreign exchange (gains) losses, net

 

 

(351)

 

 

 

518

 

 

 

3,081

 

 

 

(14,013)

 

Interest (income) expense, net

 

 

12,143

 

 

 

13,619

 

 

 

23,266

 

 

 

25,315

 

Income tax expense

 

 

21,233

 

 

 

16,986

 

 

 

39,716

 

 

 

41,847

 

Stock-based compensation expense

 

 

21,525

 

 

 

18,844

 

 

 

39,987

 

 

 

36,331

 

Amortization and impairment of acquired intangible assets

 

 

7,773

 

 

 

11,709

 

 

 

15,977

 

 

 

22,223

 

Restructuring expenses

 

 

-

 

 

 

21,658

 

 

 

-

 

 

 

21,658

 

Acquisition-related expenses

 

 

-

 

 

 

-

 

 

 

967

 

 

 

-

 

Adjusted income from operations

 

$

136,045

 

 

$

145,495

 

 

$

257,557

 

 

$

281,220

 

Net income margin

 

 

8.4

%

 

 

6.9

%

 

 

8.0

%

 

 

8.1

%

Adjusted income from operations margin

 

 

15.4

%

 

 

16.2

%

 

 

15.2

%

 

 

15.4

%

 

 

 

 

Reconciliation of Income from Operations/Margin to Adjusted Income from Operations/Margin

(Unaudited)

(In thousands)

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

Income from operations

 

$

106,202

 

 

$

90,364

 

 

$

196,274

 

 

$

201,022

 

Stock-based compensation expense

 

 

21,525

 

 

 

18,844

 

 

 

39,987

 

 

 

36,331

 

Amortization and impairment of acquired intangible assets

 

 

7,773

 

 

 

11,709

 

 

 

15,977

 

 

 

22,223

 

Acquisition-related expenses

 

 

-

 

 

 

-

 

 

 

967

 

 

 

-

 

Other income (expense), net

 

 

560

 

 

 

2,920

 

 

 

4,363

 

 

 

(14

)

Restructuring expenses

 

 

-

 

 

 

21,658

 

 

 

-

 

 

 

21,658

 

Equity-method investment activity, net

 

 

(15

)

 

 

-

 

 

 

(11

)

 

 

-

 

Adjusted income from operations

 

$

136,045

 

 

$

145,495

 

 

$

257,557

 

 

$

281,220

 

Income from operations margin

 

 

12.0

%

 

 

10.0

%

 

 

11.6

%

 

 

11.0

%

Adjusted income from operations margin

 

 

15.4

%

 

 

16.2

%

 

 

15.2

%

 

 

15.4

%

 

 


 

 

Reconciliation of Diluted EPS to Adjusted Diluted EPS6

(Unaudited)

(Per share data) 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

Diluted EPS

 

$

0.38

 

 

$

0.32

 

 

$

0.69

 

 

$

0.76

 

Stock-based compensation expense

 

 

0.11

 

 

 

0.10

 

 

 

0.21

 

 

 

0.19

 

Amortization and impairment of acquired intangible assets

 

 

0.04

 

 

 

0.06

 

 

 

0.08

 

 

 

0.11

 

Acquisition-related expenses

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Restructuring expenses

 

 

-

 

 

 

0.11

 

 

 

-

 

 

 

0.11

 

Tax impact on stock-based compensation expense

 

 

(0.03

)

 

 

(0.02

)

 

 

(0.05

)

 

 

(0.06

)

Tax impact on amortization and impairment of acquired intangible assets

 

 

(0.01

)

 

 

(0.02

)

 

 

(0.02

)

 

 

(0.03

)

Tax impact on restructuring expenses

 

 

-

 

 

 

(0.03

)

 

 

-

 

 

 

(0.03

)

Tax impact on acquisition-related expenses

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Adjusted diluted EPS

 

$

0.49

 

 

$

0.52

 

 

$

0.92

 

 

$

1.05

 

 


 

6 

Due to rounding, the numbers presented in this table may not add up precisely to the totals provided.

 


 

The following tables show the reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measures for the year ending December 31, 2020:

Reconciliation of Outlook for Net income Margin to Adjusted Income from                                  Operations Margin7

(Unaudited)

 

 

 

Year ending December 31, 2020

 

Net income margin

 

 

8.2

%

Estimated foreign exchange (gains) losses, net

 

 

(0.4

)%

Estimated interest (income) expense, net

 

 

1.3

%

Estimated income tax expense

 

 

2.6

%

Estimated stock-based compensation expense

 

 

2.1

%

Estimated amortization and impairment of acquired intangible assets

 

 

1.1

%

Estimated restructuring expenses

 

 

0.6

%

Adjusted income from operations margin

 

 

15.5

%

 

 

Reconciliation of Outlook for Income from Operations Margin to Adjusted Income from Operations Margin7

(Unaudited)

 

 

 

Year ending December 31, 2020

 

Income from operations margin

 

 

11.8

%

Estimated stock-based compensation expense

 

 

2.1

%

Estimated amortization and impairment of acquired intangible assets

 

 

1.1

%

Estimated restructuring expenses

 

 

0.6

%

Adjusted income from operations margin

 

 

15.5

%

 

 

Reconciliation of Outlook for Diluted EPS to Adjusted Diluted EPS7

(Unaudited)

(Per share data)

 

 

 

Year ending December 31, 2020

 

 

 

Lower

 

 

Upper

 

Diluted EPS

 

$

1.51

 

 

 

1.55

 

Estimated stock-based compensation expense

 

 

0.39

 

 

 

0.39

 

Estimated amortization and impairment of acquired intangible assets

 

 

0.21

 

 

 

0.21

 

Estimated restructuring expenses

 

 

0.11

 

 

 

0.11

 

Estimated tax impact on stock-based compensation

 

 

(0.11)

 

 

 

(0.11)

 

Estimated tax impact on amortization and impairment of acquired intangible assets

 

 

(0.05)

 

 

 

(0.05)

 

Estimated tax impact on restructuring expenses

 

(0.03)

 

 

(0.03)

 

Adjusted diluted EPS

 

$

2.03

 

 

 

2.07

7

 

 

7 

Due to rounding, the numbers presented in this table may not add up precisely to the totals provided.

v3.20.2
Document and Entity Information
Aug. 06, 2020
Cover [Abstract]  
Entity Registrant Name GENPACT LIMITED
Amendment Flag false
Entity Central Index Key 0001398659
Document Type 8-K
Document Period End Date Aug. 06, 2020
Entity Incorporation State Country Code D0
Entity File Number 001-33626
Entity Tax Identification Number 98-0533350
Entity Address, Address Line One Victoria Place
Entity Address, Address Line Two 5th Floor
Entity Address, Address Line Three 31 Victoria Street
Entity Address, City or Town Hamilton
Entity Address, Postal Zip Code HM 10
Entity Address, Country BM
City Area Code (441)
Local Phone Number 294-8000
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Security 12b Title Common shares, par value $0.01 per share
Trading Symbol G
Security Exchange Name NYSE