Camelot Information Systems Inc. Announces Unaudited First-Quarter 2012 Financial Results
BEIJING, May 22, 2012 /PRNewswire-Asia-FirstCall/ -- Camelot Information Systems Inc. ("Camelot" or the "Company") (NYSE: CIS), a leading domestic provider of enterprise application services and financial industry IT services in China, today announced unaudited financial results for the first quarter of 2012 ended March 31, 2012.
First-Quarter Financial and Operating Highlights:
- Net revenues increased 6.6% year-over-year to $57.1 million in the first quarter of 2012, as compared to $53.6 million in the first quarter of 2011
- Gross profit was $12.7 million, as compared to $13.9 million in the year-ago quarter
- Operating loss was $1.6 million, as compared to operating income of $2.8 million in the year-ago quarter
- Adjusted operating income[1] was $0.6 million, as compared to adjusted operating income of $5.5 million in the year-ago quarter
- Net loss was $0.8 million, as compared to net income of $2.3 million in the year-ago quarter.
- Adjusted net income[1] attributable to Camelot was $1.4 million as compared to $5.1 million in the year-ago quarter.
- A new wholly owned subsidiary, Camelot Financial Information Technology Services Co., Ltd., started operation in March 2012 to consolidate the Financial Industry IT Services (FIS) resources with a sole focus on clients, technology and markets in the banking, financial services and insurance sector
- Entered into a strategic cooperative agreement with Huawei Device Co., Ltd. ("Huawei Device") in April 2012 to develop enterprise application solutions for Huawei Device's mobile business users
Mr. Simon Ma, Camelot's Chairman and Chief Executive Officer, commented, "We are satisfied with our results for the first quarter of 2012 and we met or exceeded our financial targets. As part of our plan to invest in solutions and consulting services, we entered into an agreement with Huawei to develop enterprise solutions for their mobile platform. We also invested in our consulting business by hiring over 150 business-transformation consulting professionals who are uniquely positioned to serve mission-critical demands in several industries. In addition, we are on track with our plans of integrating our FIS businesses."
"We believe that we are well-poised to generate substantial returns on our investment and are confident we remain on track towards building a cohesive foundation for sustainable, long-term growth and continuing our leadership in the industry." concluded Mr. Ma.
First-Quarter 2012 Financial Results
Net revenues for the first quarter ended March 31, 2012 increased 6.6% to $57.1 million from $53.6 million in the year-ago quarter.
Net Revenues by Business Line (in thousands, except percentage)
|
|
Three Months Ended |
Three Months Ended |
||
| Enterprise application services |
$39,308 |
68.8% |
$36,120 |
67.4% |
| Financial industry IT services |
17,815 |
31.2% |
17,446 |
32.6% |
| Total net revenues |
57,123 |
100.0% |
53,566 |
100.0% |
Enterprise Application Services (EAS) revenues increased 8.8% year-over-year to $39.3 million in the quarter but declined slightly from the prior quarter. The increase in quarterly EAS revenues was primarily fueled by organic growth. EAS revenues amounted to 68.8% of net revenues in the quarter. FIS revenues increased slightly year-over-year to $17.8 million and declined sequentially in line with seasonal norms. FIS revenues accounted for 31.2% of the quarter's net revenues.
GAAP cost of revenues increased 12.1% to $44.4 million from $39.6 million in the year-ago quarter. Adjusted cost of revenues increased 13.3% to $44.4 million from $39.2 million in the year-ago quarter. Cost of revenues increased faster than net revenues due to increased headcount alongside investment in expanding the solutions portfolio. Adjusted cost of revenues excluded $24,000 of share-based compensation expense and $32,000 of acquisition-related intangible expense.
GAAP gross profit decreased 8.8% to $12.7 million from $13.9 million in the year-ago quarter. Adjusted gross profit decreased 11.5% to $12.8 million from $14.4 million in the year-ago quarter. The GAAP gross margin was 22.2% in the quarter, as compared to 26.0% in the year-ago quarter. The adjusted gross margin was 22.3%, as compared to 26.9% in the year-ago quarter.
GAAP operating expenses were $14.3 million in the quarter, compared to $11.1 million in the year-ago quarter. GAAP operating expenses included $1.6 million of share-based compensation expense and $552,000 of acquisition-related intangible expense. Adjusted operating expenses were $12.1 million, representing a 36.7% increase over $8.9 million in the year-ago quarter. The increase was primarily attributable to increased legal and professional fees and additional senior-level hires.
The GAAP operating loss was $1.6 million, as compared to operating income of $2.8 million in the year-ago quarter. Adjusted operating income was $0.6 million, as compared to adjusted operating income of $5.5 million in the year-ago quarter.
The GAAP net loss attributable to Camelot for the first quarter of 2012 was $0.8 million, as compared to net income of $2.3 million in the year-ago quarter. Adjusted net income attributable to Camelot for the first quarter of 2012 was $1.4 million, as compared to adjusted net income of $5.1 million in the year-ago quarter.
Balance Sheet and Cash Flow
As of March 31, 2012, the Company had $79.1 million in cash, cash equivalents and term deposits, as compared to $102.4 million in cash, cash equivalents and term deposits as of December 31, 2011. The decrease was mainly due to an operating cash outflow of $16.4 million.
In the first quarter of 2012, the Company did not repurchase any shares.
Days' sales outstanding[2] ("DSO") were 181 days for the first quarter of 2012, as compared to 174 days in the prior quarter, with the increase attributable to delays in invoicing in the FIS business line currently undergoing integration.
Employees
The Company's headcount increased to 5,246 as of March 31, 2012 from 4,718 at the end of the fourth quarter of 2011, which included 4,489 information technology (IT) professionals. Of the IT professionals, EAS employee headcount was 2,206, and FIS employee headcount was 2,283.
Recent Events
On March 15, 2012, Camelot appointed Ms. Joanna Wang and Mr. David Wang as independent directors.
On March 23, 2012, Camelot announced the formation of a wholly owned, focused subsidiary, Camelot Financial Information Technology Services Co, Ltd, in order to accelerate the development of the Company's FIS business. Mr. Yuhui Wang, formerly CEO of Camelot's subsidiary, Agree, serves as the Chief Executive Officer of the new subsidiary.
On April 18, 2012, Camelot entered into a strategic cooperative agreement with Huawei Device to develop enterprise application solutions for Huawei Device's mobile business users.
On May 2, 2012, Camelot appointed Mr. Bo Chen as an independent director to its Board of Directors.
Business Outlook
Second Quarter of 2012
Camelot expects net revenues in the second quarter of 2012 of approximately $62 million, representing a 4.4% increase from the second quarter of 2011.
In addition, Camelot expects second-quarter 2012 adjusted net income attributable to Camelot of approximately $3.2 million, representing an 11.0% increase from the second quarter of 2011.
Full-Year 2012
For full-year 2012, Camelot continues to expect net revenues of approximately $266 million, representing a 17.1% increase from the prior year.
Camelot also continues to expect full-year 2012 adjusted net income attributable to Camelot of approximately $18 million, representing a 17.0% increase from the prior year.
Conference-Call Information
Camelot senior management will host a conference call at 8:00 a.m. (U.S. Eastern Daylight Time) / 5:00 a.m. (U.S. Pacific Daylight Time) / 8:00 p.m. (Beijing / Hong Kong time) on Tuesday, May 22, 2012 to discuss the Company's first-quarter 2012 financial results.
The conference call may be accessed by calling:
| US Toll free: |
800.510.9661 |
| US Toll / International: |
617.614.3452 |
| Hong Kong toll free: |
800.96.3844 |
| HK Toll: |
852.3002.1672 |
| UK toll free: |
08082347616 |
| UK toll: |
44.207.365.8426 |
| South China toll free / China Telecom: |
10 800 130 1713 |
| North China toll free / China Netcom: |
10 800 713 1756 |
| China toll: |
86 4008811630 |
| Taiwan toll free: |
00801148420 |
Passcode: 91974695
Please dial in approximately 10 minutes before the scheduled time of the call.
A replay of the conference call may be accessed by phone at the following numbers until Tuesday, May 29, 2012:
| US Toll free: |
888-286-8010 |
| US Toll / International: |
617-801-6888 |
Passcode: 92629279
A live webcast of the conference call and recording of the conference call will be available on the investor relations page of Camelot's website at www.camelotchina.com.
USE OF NON-GAAP FINANCIAL MEASURES
To supplement the unaudited consolidated financial statements presented in accordance with U.S. GAAP, Camelot uses the non-GAAP ("adjusted") financial measures of gross profit and margin, operating expenses, operating income and margin, net income attributable to Camelot Information Systems Inc. and margin, and diluted earnings per share and diluted earnings per ADS, which are adjusted from results based on U.S. GAAP to exclude share-based compensation, acquisition-related intangible amortization, and changes in fair value of contingent consideration. The non-GAAP financial measures are provided as additional information to help our investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of our current financial performance and prospects for the future. The non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for or superior to U.S. GAAP results. In addition, our calculation of the non-GAAP financial measures may differ from the calculations used by other companies, and therefore comparability may be limited.
STATEMENT REGARDING UNAUDITED FINANCIAL INFORMATION
The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company's year-end financial statements, which could result in significant differences from this unaudited financial information.
ABOUT CAMELOT INFORMATION SYSTEMS INC.
Camelot is a leading domestic provider of enterprise application services and financial industry information technology ("IT") services in China, focusing on the high end of the IT value chain. The Company is the largest domestic provider of SAP-based Enterprise Resource Planning services in China as measured by 2010 revenue and by the number of SAP consultants as of December 31, 2010. Camelot also ranked as number-one in the banking testing market in 2010, according to IDC. Camelot also operates in other areas of the Asia Pacific region, including Taiwan and Japan. The Company provides services to a wide range of industries, including financial services, resources and energy, manufacturing and automobile, technology, as well as telecommunication, media and education.
SAFE HARBOR
This press release contains statements that may constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties that could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's growth strategies, the Company's ability to attract and retain skilled professionals, the market of IT services in China, the wages of IT professionals, the Company's ability to serve, retain, and attract customers. Further information regarding these and other risks is included in Camelot's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. Camelot does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
[1] As used in this press release, non-GAAP adjustments include share-based compensation expenses amortization expense related to intangible assets acquired for business acquisition and changes in fair value of contingent consideration. For more information about the adjusted (i.e. non-GAAP) financial measures contained in this press release, please see "Use of Non-GAAP Financial Measures" below.
[2] Calculated by dividing average accounts receivable, net of deferred revenue, by rolling gross revenues before business tax and related surcharges, and multiplying by 360 days. Rolling gross revenues is for the 12 months ended March 31, 2012.
| Company Contacts: Camelot Information Systems Inc. Mr. Franklin King, Interim Chief Financial Officer Tel: +86 (10) 8201 9008 E-mail: [email protected]
Ms. Jojo Guo, Investor Relations Manager Tel: +1 (646) 371-6533 E-mail: [email protected]
|
Investor Relations Contacts: CCG Investor Relations Mr. Crocker Coulson, President Tel: +1 (646) 213-1915 E-mail: [email protected]
Mr. John Harmon, CFA, Sr. Acct. Mgr. Tel: +86 (10) 8573 1014 (Beijing) E-mail: [email protected]
|
-financial tables follow-
| CAMELOT INFORMATION SYSTEMS INC. |
|||
| Condensed Consolidated Balance Sheets (Unaudited) |
|||
| (U.S. Dollars in Thousands, Except per Share Data)
|
|||
| March 31, |
December 31, |
||
| Assets |
|||
| Current assets |
|||
| Cash and cash equivalents |
$43,781 |
$57,128 |
|
| Term deposits |
35,290 |
45,318 |
|
| Restricted cash |
1,089 |
4,626 |
|
| Billed accounts receivable |
38,269 |
47,834 |
|
| Unbilled accounts receivable |
104,804 |
87,212 |
|
| Other current assets |
19,746 |
19,659 |
|
| Total current assets |
242,979 |
261,777 |
|
| Property and equipment, net |
4,531 |
4,673 |
|
| Goodwill and other intangible assets |
50,192 |
46,248 |
|
| Other long-term assets |
2,539 |
2,698 |
|
| Total assets |
300,241 |
315,396 |
|
| Liabilities and shareholders' equity |
|||
| Current liabilities |
|||
| Consideration payable in connection with business acquisition |
3,144 |
5,132 |
|
| Other current liabilities |
56,202 |
71,099 |
|
| Total current liabilities |
59,346 |
76,231 |
|
| Contingent consideration in relation to acquisition |
2,869 |
2,822 |
|
| Other non-current liabilities |
4,239 |
4,255 |
|
| Total liabilities |
66,454 |
83,308 |
|
| Equity (a) |
233,787 |
232,088 |
|
| Total liabilities and equity |
300,241 |
315,396 |
|
| Note: (a) As of March 31, 2012, there were 177,621,367 ordinary shares issued and outstanding. |
|||
| CAMELOT INFORMATION SYSTEMS INC. |
|||
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) |
|||
| (U.S. Dollars in Thousands, Except per Share Data) |
|||
|
Three months ended March 31, |
|||
| 2012 |
2011 |
||
| Net revenues |
$57,123 |
$53,566 |
|
| Cost of revenues(1)(2) |
(44,429) |
(39,642) |
|
| Gross profit |
12,694 |
13,924 |
|
| Selling and marketing(1)(2) |
(4,609) |
(3,270) |
|
| General and administrative(1)(2) |
(7,984) |
(6,420) |
|
| Research and development costs |
(1,667) |
(846) |
|
| Changes in fair value of contingent consideration for acquisition |
(47) |
(607) |
|
| Total operating expense |
(14,307) |
(11,143) |
|
| Government subsidies |
- |
4 |
|
| (Loss)/ Income from operations |
(1,613) |
2,785 |
|
| Interest expense |
(92) |
(236) |
|
| Interest income |
349 |
239 |
|
| (Loss)/ Income before provisions for income tax |
(1,356) |
2,788 |
|
| Income tax benefit/(expense) |
293 |
(500) |
|
| Net (loss)/ income |
(1,063) |
2,288 |
|
| Noncontrolling interest |
225 |
46 |
|
| Net (loss)/ income attributable to Camelot Information Systems Inc.(3) |
(838) |
2,334 |
|
| Earnings per share: |
|||
| Basic-ordinary shares |
($0.005) |
$0.01 |
|
| Diluted-ordinary shares |
($0.005) |
$0.01 |
|
| Earnings per ADS: |
|||
| Basic-ADSs |
($0.02) |
0.05 |
|
| Diluted-ADSs |
($0.02) |
0.05 |
|
| Weighted average shares outstanding: |
|||
| Basic-ordinary shares |
177,621,367 |
180,739,042 |
|
| Diluted-ordinary shares |
177,621,367 |
194,898,108 |
|
| Weighted average ADSs outstanding: |
|||
| Basic-ADSs |
44,405,342 |
45,184,760 |
|
| Diluted-ADSs |
44,405,342 |
48,724,527 |
|
| Net (loss)/ income |
(1,063) |
2,288 |
|
| Other comprehensive income, net of tax: |
|||
| Change in cumulative foreign currency translation adjustments |
68 |
963 |
|
| Comprehensive income |
(995) |
3,251 |
|
| Less: comprehensive income attributable to the noncontrolling interest |
(217) |
(50) |
|
| Comprehensive income attributable to Camelot Information Systems Inc. |
(778) |
3,301 |
|
(1) Includes the following amounts of share-based compensation expenses for the periods indicated
| Three Months Ended March 31, |
|||
| 2012 |
2011 |
||
| Cost of revenues |
$24 |
$28 |
|
| Selling and marketing |
1,087 |
156 |
|
| General and administrative |
498 |
469 |
|
| Total share-based compensation expenses |
1,609 |
653 |
|
(2) Includes the following amounts of amortization expense related to intangible assets acquired for business combination for the periods indicated
| Three Months Ended March 31, |
|||
| 2012 |
2011 |
||
| Cost of revenues |
$32 |
$455 |
|
| Selling and marketing |
481 |
973 |
|
| General and administrative |
71 |
68 |
|
| Total acquisition-related intangible amortization expenses |
584 |
1,496 |
|
(3) The following table sets forth the reconciliation of our adjusted net income attributable to Camelot Information Systems Inc. to the U.S. GAAP net income attributable to Camelot Information Systems Inc.
| Three Months Ended March 31, |
|||
| 2012 |
2011 |
||
| Net (loss)/ income attributable to Camelot Information Systems Inc. |
$(838) |
$2,334 |
|
| Share-based compensation |
1,609 |
653 |
|
| Acquisition-related intangible amortization |
584 |
1,496 |
|
| Changes in fair value of contingent consideration |
47 |
607 |
|
| Total adjusted amounts |
2,240 |
2,756 |
|
| Adjusted net income attributable to Camelot Information Systems Inc. |
1,402 |
5,090 |
|
|
CAMELOT INFORMATION SYSTEMS INC. |
|||
| Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||
| (U.S. Dollars in Thousands) |
|||
| Three-Month |
|||
| 2012 |
2011 |
||
| Cash flow from operating activities: |
|||
| Net (loss)/ income |
$(1,063) |
$2,288 |
|
| Adjustments to reconcile net (loss)/ income to net cash used in operating activities: |
|||
| Depreciation of property and equipment |
265 |
272 |
|
| Amortization of intangible assets |
690 |
1,545 |
|
| Deferred income taxes |
482 |
(160) |
|
| Provision for account receivable |
(429) |
- |
|
| Share-based compensation |
1,609 |
653 |
|
| Gains on disposal of property and equipment |
18 |
9 |
|
| Change in fair value of contingent consideration for acquisition |
47 |
607 |
|
| Changes in operating assets and liabilities: |
|||
| Accounts receivable |
(7,663) |
(2,519) |
|
| Other assets |
(645) |
(2,149) |
|
| Accounts payable |
(2,686) |
(2,366) |
|
| Other liabilities |
(6,993) |
(6,001) |
|
| Net cash used in operating activities |
(16,368) |
(7,821) |
|
| Cash flows from investing activities: |
|||
| Term deposits |
10,035 |
(38) |
|
| Restricted cash |
3,558 |
(7,824) |
|
| Proceeds from disposal of property and equipment |
4 |
13 |
|
| Purchase of property and equipment |
(141) |
(246) |
|
| Purchase of intangible assets and other asset |
(56) |
- |
|
| Purchase of businesses, net of cash acquired |
(3,500) |
(11,430) |
|
| Net cash provided by/ (used in) investing activities |
9,900 |
(19,525) |
|
| Cash flows from financing activities: |
|||
| Proceeds from bank borrowing |
2,544 |
7,494 |
|
| Repayment of bank borrowing |
(7,505) |
(2,090) |
|
| Payment of contingent consideration for an acquisition |
(1,949) |
- |
|
| Payment of professional fee related to initial public offering |
- |
(328) |
|
| Others |
- |
666 |
|
| Net cash (used in)/ provided by financing activities |
(6,910) |
5,742 |
|
| Effect of foreign exchange rate changes |
31 |
183 |
|
| Net decrease in cash and cash equivalents |
(13,347) |
(21,421) |
|
| Cash and cash equivalents, beginning of period |
57,128 |
140,356 |
|
| Cash and cash equivalents, end of period |
43,781 |
118,935 |
|
| CAMELOT INFORMATION SYSTEMS INC. |
|||||||||
| Reconciliations of Adjusted Financial Measures to Comparable GAAP Measures (Unaudited) |
|||||||||
| (US Dollars in Thousands, Except per Share Data and Percentage)
|
|||||||||
| Three Months Ended March 31, 2012 |
Three Months Ended March 31, 2011 |
||||||||
| GAAP |
Adjustments |
Adjusted |
GAAP |
Adjustments |
Adjusted |
||||
| Cost of revenues |
$44,429 |
$(56) |
(a) |
$44,373 |
$39,642 |
$(483) |
(a) |
$39,159 |
|
| Operating expenses |
14,307 |
(2,184) |
(a) |
12,123 |
11,143 |
(2,273) |
(a) |
8,870 |
|
| Operating (loss)/income |
(1,613) |
2,240 |
(a) |
627 |
2,785 |
2,756 |
(a) |
5,541 |
|
| Net (loss)/income |
(838) |
2,240 |
(a)(d) |
1,402 |
2,334 |
2,756 |
(a) |
5,090 |
|
| Net gross margin |
22.2% |
0.1% |
(b) |
22.3% |
26.0% |
0.9% |
(b) |
26.9% |
|
| Net operating margin |
(2.8%) |
3.9% |
(a) |
1.1% |
5.2% |
5.1% |
(a) |
10.3% |
|
| Net margin |
(1.5%) |
3.9% |
(a) |
2.4% |
4.4% |
5.1% |
(a) |
9.5% |
|
| Diluted EPS |
($0.005) |
$0.013 |
(c) |
$0.008 |
$0.01 |
$0.02 |
(c) |
$0.03 |
|
| Diluted EPADS |
($0.02) |
$0.05 |
(c) |
$0.03 |
$0.05 |
$0.05 |
(c) |
$0.10 |
|
Notes:
(a) The non-GAAP adjustments include share-based compensation expenses amortization expense related to intangible assets acquired for business acquisition and changes in fair value of contingent consideration, where were presented in the notes (1) and (2) below Condensed Consolidated Statements of Operations (Unaudited) for the reconciliation process
(b) Adjustment to exclude acquisition-related intangible assets amortization expense and share-based compensation recorded in cost of sales, $56 and $483 for three-month period ended March 31, 2012 and 2011.
(c) Adjusted diluted EPS is computed by dividing adjusted net income attributable to Camelot Information Systems Inc. by the weighted average number of diluted ordinary shares outstanding used in computing the GAAP diluted EPS for the respective periods.
(d) Net income refers to net income attributable to Camelot.
SOURCE Camelot Information Systems Inc.
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