Lionbridge Announces Q4 and FY 2013 Results; Reports Record Quarterly Revenue of $127.5 Million, Record GAAP EPS of $0.10 and Non-GAAP EPS of $0.18 Delivers Strong FY 2013 with Revenue of $489.2 Million, GAAP EPS of $0.19 and non-GAAP EPS of $0.44; Reaffirms Outlook for Ongoing Revenue and Earnings Growth in 2014

WALTHAM, Mass., Feb. 4, 2014 /PRNewswire/ -- Lionbridge Technologies, Inc. (Nasdaq: LIOX) today announced financial results for the fourth quarter and year ended December 31, 2013. 

Financial highlights for the fourth quarter include:

  • Record revenue of $127.5 million, an increase of $13.6 million, or 12% year-on-year compared to the fourth quarter of 2012.
  • GAAP net income of $6.5 million, or $0.10 per share based on 62.4 million fully diluted shares outstanding, compared to GAAP net income of $3.3 million, or $0.05 per diluted share in the fourth quarter of 2012. 
  • Non-GAAP adjusted earnings of $10.9 million or $0.18 per share. The Company defines non-GAAP earnings as GAAP net income excluding restructuring and acquisition-related costs, asset impairment, stock-based compensation and amortization of acquisition-related intangible assets.  Please see the section of this release entitled "Non-GAAP Financial Measures" and the attached table for details and reconciliations of this measure to the comparable GAAP measure. 
  • Cash flow from operations of $11.4 million during the quarter.  
  • Ending cash balance of $38.9 million and long-term debt of $27.0 million.

"The fourth quarter marked yet another quarter of strong top line growth, solid earnings expansion and increasing cash flows.  Our second half momentum and strong new business pipeline underscore that  we have the right strategy, the right model and the right offerings to deliver sustainable annual revenue and earnings growth," said Rory Cowan, CEO of Lionbridge.  "As we apply our unique crowd-in-the-cloud model to new applications and new markets, we expect ongoing growth in 2014 and beyond."

Financial Highlights for Fiscal Year 2013 include:

  • Revenue of $489.2 million, an increase of $32.0 million, or 7% year-on-year compared to FY 2012.
  • GAAP net income of $12.0 million, or $0.19 per share based on 62.0 million fully diluted shares outstanding.  This compares to GAAP net income of $11.3 million, or $0.19 per diluted share in FY 2012. 
  • Non-GAAP adjusted earnings of $27.3 million or $0.44 per share. The Company defines non-GAAP earnings as GAAP net income excluding restructuring and acquisition-related costs, asset impairment, stock-based compensation and amortization of acquisition-related intangible assets.  Please see the section of this release entitled "Non-GAAP Financial Measures" and the attached table for details and reconciliations of this measure to the comparable GAAP measure. 
  • Cash flow from operations of $28.8 million for the year.  

Business highlights for FY 2013 include:

  • Secured several, multi-year, multi-million dollar engagements with leading organizations in the automotive, life sciences, luxury retail, manufacturing, technology and hospitality industries.  
  • Appointed Richard Tobin, a former SVP of Operations for DigitasLBi, as Senior Vice President and General Manager responsible for Lionbridge's language services business and global marketing operations offerings.
  • Announced and closed the acquisition of E5 Systems, a US-based, privately-held provider of application development and testing solutions.  With E5 Systems' annual revenue of approximately $4 million, the acquisition provides Lionbridge with access to long-standing relationships with clients in the hospitality and financial services industries and qualified development and testing professionals in the US and in Jinan, China.
  • Successfully expanded its global digital marketing offerings as Lionbridge worked with global brand leaders to manage and optimize digital marketing campaigns in international markets.
  • Introduced and secured several new clients for Lionbridge Business Process Crowdsourcing practice, a suite of professional crowdsourcing offerings that enable enterprises to increase productivity, maximize workforce elasticity and reduce costs through a highly flexible workforce model. The new offerings, which include data research and validation, in-country testing and crowd-based language services, enable Lionbridge to extend its proven, professional crowd solutions into new vertical markets.
  • Acquired 1.7 million shares of its common stock for an aggregate purchase price of $5.2 million
  • Established a new five-year, $100 million global bank facility, which includes a $65 million revolving credit facility with an additional $35 million accordion feature. The new facility replaces the Company's previous revolving credit facility. The Company plans to use the new facility to fund investments, including potential acquisitions.

"We exited 2013 with strong revenue and margin momentum year-on-year.  We continued to grow our large, long-standing clients through innovative new solutions and offerings.  We secured new business wins with multi-year commitments for recurring revenue.  We continued to successfully expand our business into new vertical markets," said Rory Cowan, CEO of Lionbridge. "Our achievements in 2013 serve as a platform for our continued revenue and earnings growth this year and beyond."   

The Company provided revenue expectations for the first quarter 2014 with estimated revenue of $120-$123 million.  Lionbridge also reiterated its expectations for FY 2014 revenue growth of 5-10% year-on-year with further growth in profitability. 

Lionbridge management will conduct a conference call at 9:00 a.m. ET this morning to discuss financial performance for the quarter and other matters, including matters related to its future performance. To participate, callers within the United States can dial 888-673-9804 and international callers can dial 312-470-7373.  The pass code for the call is Lionbridge. The conference call will also be available online here or on the financial events page of the investor guide on the Lionbridge website www.lionbridge.com

Non-GAAP Financial Measures
In this release, the Company's adjusted earnings and adjusted earnings per share are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of results of operations.  These measures are presented because management believes they provide additional information to investors with respect to the performance of our fundamental business activities. These measures are Non-GAAP financial measures and should not be viewed as alternatives to GAAP measures of performance.  Management believes the most directly comparable GAAP financial measures for adjusted earnings and adjusted earnings per share are net income and diluted net income per share respectively, and has provided a reconciliation of these measures to net income  at the end of this release.

About Lionbridge
Lionbridge Technologies, Inc. (NASDAQ: LIOX) is a provider of translation, development and testing solutions. Lionbridge combines global resources with proven program management methodologies to serve as an outsource partner throughout a client's product and content lifecycle - from development to translation, testing and maintenance. Global organizations rely on Lionbridge services to increase international market share, speed adoption of global products and content, and enhance their return on enterprise applications and IT system investments. Based in Waltham, Mass., Lionbridge maintains solution centers in 26 countries and provides services under the Lionbridge and VeriTest brands. To learn more, visit http://www.lionbridge.com.

Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including expected financial performance, anticipated customer demand for the Company's services and expected revenue and earnings growth, the pace and strengthening of such growth, of Lionbridge in Q1 2014, and FY 2014, and the company's planned use of its new credit facility to fund investments including potential acquisitions.  These forward-looking statements reflect management's current views and Lionbridge does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date hereof except as required by law. Lionbridge's actual experiences, actions, financial and operating results may differ materially from those discussed in the forward-looking statements. Factors that might cause such a difference include Lionbridge's ability to provide and maintain high quality services at a competitive price and related customer satisfaction with such service delivery; the loss of or reduction in demand from one or more major client or customer, which would materially affect Lionbridge's business; Lionbridge's ability to expand its relationships with existing clients; [the cost and timing of cost reduction and restructuring activities;] Lionbridge's ability to broaden its client base; the Company's dependence on clients' product releases, production schedules and procurement strategies to generate revenues; the Company's ability to attract and integrate new operational leadership; the anticipated benefits of expansion of global language workflow technologies; the impact of competing language technology on the Company's existing customer relationships and ability to secure new customers; the ability of Lionbridge to realize the expected benefits of its technology initiatives and acquisitions, including E5 Systems, and the timing of the realization of such benefits; errors, interruptions or delays in SaaS-based technology, technology-enabled delivery platforms or Web hosting; breaches of security measures; risks associated with the financial aspects of the subscription model utilized in connection with the its SaaS-based technology offerings; the cost, complexity, timing and speed of continued development and enhancements technology initiatives, including customer and user acceptance of the Company's services and technologies; the termination of customer contracts or engagements prior to the end of their term; the size, timing and recognition of revenue from clients; the ability of Lionbridge to integrate acquisitions and expand its customer relationships and the timing and success of such activities; the impact of foreign currency fluctuations on revenue, margins, costs, operating results and profitability and the Company's ability to successfully manage this exposure; the portion of the Company's service engagements that are subject to the impact of foreign currency fluctuations; uncertainty and volatility in global economic conditions that could negatively affect demand for the Company's services and technologies; reduced demand for the Company's services that adversely impacts Lionbridge's future revenues, cash flows, results of operations and financial condition; Lionbridge's ability to perform services in lower cost operational locations and the timing of its transfer of service execution to such locations, and customer acceptance of service execution in such locations; risks associated with conducting business outside of the United States, including compliance with changing and potentially conflicting laws and regulations and expenses and delays associated with any such activities; risks associated with competition; Lionbridge's ability to forecast revenue, profitability, technology adoption, customer demand and operating results; changes in tax rates applicable to the Company and changes to the interpretations of applicable tax rates; changes in interpretation of statutory and regulatory positions by international tax authorities in countries in which Lionbridge conducts business; changes in interpretation of employment and tax positions by U.S. state and federal authorities; the failure of Lionbridge to keep pace with technological changes or changing customer needs; the risk of claims by third parties of intellectual property claims; the ability of Lionbridge to respond to fluctuations in the complexity, timing and mix of services required by customers; and Lionbridge being held liable for defects or errors in its service offerings.  For a more detailed description of the risk factors associated with Lionbridge, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2012 and subsequent filings with the SEC (copies of which may be accessed through the SEC's website at http://www.sec.gov.

Contact:
Sara Buda
Vice President, Investor Relations
Lionbridge Technologies
(781) 434-6190
sara.buda@lionbridge.com


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)










Three Months Ended


Twelve Months Ended


December 31,


December 31,


2013

2012


2013

2012







Revenue

$ 127,472

$ 113,843


$ 489,196

$ 457,198

Operating expenses:






Cost of revenue (excluding depreciation and amortization shown
                separately below)

 

85,290

 

79,330


 

334,513

 

314,252

Sales and marketing

9,219

9,755


36,216

34,807

General and administrative

21,219

17,588


80,462

75,258

Research and development

1,622

1,293


6,750

5,399

Depreciation and amortization

1,861

1,695


7,374

6,616

Amortization of acquisition-related intangible assets

867

754


3,351

2,454

Restructuring and other charges

1,730

962


5,114

8,206

Total operating expenses

121,808

111,377


473,780

446,992







Income from operations

5,664

2,466


15,416

10,206







Interest expense:






Interest on outstanding debt 

115

189


775

732

Amortization of deferred financing costs

116

25


191

99

Interest income 

12

22


92

80

Other (income) expense, net

(72)

249


878

1,054

 

Income before income taxes

5,517

2,025


 

13,664

 

8,401

Provision for (benefit from) income taxes

(1,009)

(1,248)


1,627

(2,931)

 

Net income

 

$    6,526

 

$    3,273


 

$   12,037

 

$   11,332

 

Net income per share of common stock:






Basic

$      0.11

$      0.05


$     0.20

$     0.19

Diluted

$      0.10

$      0.05


$     0.19

$     0.19







Weighted average number of common shares outstanding:






Basic

59,360

59,574


59,989

59,102

Diluted

62,443

62,628


62,003

61,119

 

LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands)






December 31,


December 31,


2013


2012





ASSETS




Current assets:




Cash and cash equivalents

$    38,867


$    25,797

Accounts receivable, net of allowances of $250 at December 31, 2013
                and December 31, 2012

 

70,431


 

64,152

Unbilled receivables

19,498


22,127

Other current assets

13,104


11,729

 

Total current assets

 

141,900


 

123,805

 

Property and equipment, net

 

20,968


 

20,157

Goodwill

19,595


18,652

Acquisition-related intangible assets, net

13,226


16,181

Other assets

5,696


5,262

 

Total assets

 

$  201,385


 

$  184,057





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$    21,784


$    19,897

Accrued compensation and benefits

18,183


14,885

Other accrued expenses and current liabilities

25,427


27,564

Deferred revenue

10,583


9,277

 

Total current liabilities

 

75,977


 

71,623





Long-term debt

27,000


26,700

Deferred income taxes, long-term

1,143


1,143

Other long-term liabilities

14,552


15,010





Total stockholders' equity

82,713


69,581









Total liabilities and stockholders' equity

$  201,385


$  184,057

 

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Earnings (Unaudited)
(Amounts in thousands, except per share data)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2013

2012


2013

2012







Net income

$     6,526

$     3,273


$ 12,037

$ 11,332







Amortization of acquisition-related intangible assets

867

754


3,351

2,454

Stock-based compensation

1,816

1,445


6,777

5,784

Restructuring and acquisition-related charges

1,730

962


5,114

3,969

Asset impairment

-

-


-

4,237

Adjusted earnings

$     10,939

$     6,434


$     27,279

$     27,776







Fully diluted weighted average number of common shares outstanding

62,443

62,628


62,003

61,119

Adjusted EPS

$ 0.18

$ 0.10


$ 0.44

$ 0.45

 

SOURCE Lionbridge Technologies, Inc.



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