Lionbridge Reports Record Earnings and Revenue for Second Quarter; Doubles Year-Over-Year EPS to $0.08, Drives 19% First Half 2004 Growth with Revenue of $41.0 Million
Outlook for Second Half and 2005 Reflects Continued Growth and Earnings Leverage
WALTHAM, Mass. — July 26, 2004 — Lionbridge Technologies, Inc. (Nasdaq: LIOX),
a leading provider of globalization and testing services, today announced record revenue
and earnings for the second quarter ended June 30, 2004.
Financial highlights for the quarter include:
- Revenue of $41.0 million, an increase of 10% compared to revenue of $37.3 million for the second quarter of 2003. For the six months ended June 30, 2004, the Company reported revenue of $80.8 million, a 19% increase compared to revenue of $68.1 million for the same period in 2003.
- GAAP net income of $3.7 million or $0.08 per share based on 48.8 million weighted average fully diluted common shares outstanding. This compares with net income of $1.5 million or $0.04 per share based on 34.7 million weighted average fully diluted common shares outstanding for the quarter ended June 30, 2003.
- Included in net income for the quarter is $241,000 of restructuring and other expenses. The Company completed the final integration of its India operation.
- Gross margin of 40% for the second quarter of 2004, an increase of 170 basis points from the first quarter of 2004.
- Record operating margin approaching 10% for the second quarter of 2004, an increase of 760 basis points from the first quarter of 2004.
- Positive cash flow from operations of $3.1 million, an increase of 131% over the first quarter of 2004. This resulted in an ending cash balance of $34.3 million.
“Our second quarter results reflect the continued maturation of our business. As we
expected, we are growing gross margins and expanding operating earnings as revenue
increases. Most importantly, the quality of our earnings is stronger than ever. This
underscores the power of our operating model,” said Rory Cowan, CEO of Lionbridge.
“We delivered this success despite a temporary slowdown in our testing business during
the quarter. Our increasing margins, successful integration of our India operation and
growing customer demand give us confidence for strength throughout the second half of
2004 and for continued expansion in 2005.”
Lionbridge also confirmed its FY 2004 guidance and offered an outlook for FY 2005.
“We remain comfortable with the mid point of revenue guidance we previously provided of
$160-170 million for 2004 and with current First Call consensus EPS,” continued Cowan.
“Our preliminary outlook for 2005 shows estimated revenue of between $190-200 million
and net income of approximately $20-26 million.”
The Company will host a conference call on Monday, July 26 at 4:30 pm ET regarding the
content of this release. The conference call will be carried live on the Internet. Instructions
for listening to the call over the Internet are available on the Investor's page of the
Lionbridge web site at www.lionbridge.com/webcast/July26/. A replay will be
available at this location for a week.
About Lionbridge
Lionbridge Technologies, Inc. (NASDAQ: LIOX) is a leading provider of globalization
and testing services. Lionbridge combines global onshore, near shore and offshore
resources with proven program management methodologies to serve as an outsource
partner throughout a client's product and content lifecycle — from development to
globalization, testing and maintenance. Global organizations in all industries 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 20 solution centers in 10
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 those
statements relating to expected growth, net income, revenue, earnings, customer demand, margin increase,
cost-saving opportunities and performance for the current and subsequent fiscal quarters and years, as well
as revenue and income guidance for the remainder of 2004 and 2005. Lionbridge''s actual experience may
differ materially from those discussed in the forward-looking statements. Factors that might cause such a
difference include the termination of customer contracts prior to the end of their term; Lionbridge''s
dependence on clients'' product releases to generate revenues; the loss of a major client or customer; the
size, timing and recognition of revenue from major clients; customer delays or postponements of services;
the impact of foreign currency fluctuations on its operating results and revenue growth; risks associated
with management of growth; market acceptance of new service offerings; the failure to keep pace with the
rapidly changing requirements of its clients; benefits realized from the acquisition of Lionbridge India; the
ability to implement and realize cost efficiencies, the ability to recognize the benefits from offshore
production capabilities and restructuring activities, and the timing and size of such restructuring activities;
Lionbridge''s ability to attract and retain key personnel; Lionbridge being held liable for defects or errors in
its solutions or services; political, economic and business fluctuations in international markets; as well as
risks of additional downturns in conditions generally, and in the information technology and software
industries specifically, and risks associated with competition and competitive pricing pressures; and
Lionbridge's ability to forecast revenue and operating results. For a more detailed description of the risk
factors associated with Lionbridge, please refer to Lionbridge's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 11, 2004.
LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenue $ 40,962 $ 37,270 $ 80,827 $ 68,121
Operating expenses:
Cost of revenue (excluding
depreciation and amortization
shown separately below) 24,559 22,517 49,130 41,476
Sales and marketing 3,673 3,273 7,257 6,089
General and administrative 7,660 7,933 15,810 14,866
Research and development 54 149 179 351
Depreciation and amortization 775 835 1,640 1,675
Amortization of
acquisition-related
intangible assets 9 116 108 231
Merger, restructuring and
other charges 241 -- 1,854 --
Stock-based compensation 124 70 243 226
Total operating expenses 37,095 34,893 76,221 64,914
Income from operations 3,867 2,377 4,606 3,207
Interest expense:
Interest on outstanding debt -- 843 -- 1,607
Accretion of discount on
notes payable -- 152 -- 305
Interest income 74 3 159 6
Other expense 29 190 67 232
Income before income taxes 3,912 1,195 4,698 1,069
Provision for (benefit from)
income taxes
201 (318) 294 (215)
Net income $3,711 $1,513 $4,404 $1,284
Net income per share of common stock:
Basic $0.08 $0.05 $0.09 $0.04
Diluted 0.08 0.04 0.09 0.04
Weighted average number of common shares outstanding:
Basic 46,496 31,859 46,412 31,787
Diluted 48,754 34,715 48,713 34,620
LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands)
June 30, December 31,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $34,326 $29,496
Restricted cash --- 338
Accounts receivable, net of allowances of
$406 and $591 at June 30, 2004 and December 31,
2003 respectively 23,923 24,653
Work in process 9,402 8,609
Other current assets 2,167 2,188
Total current assets 69,818 65,284
Property and equipment, net 2,937 4,445
Goodwill 35,021 34,994
Other intangible assets, net 83 191
Other assets 852 1,076
Total assets $108,711 $105,990
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 6,017 8,318
Accrued expenses and other current liabilities 14,844 14,278
Deferred revenue 3,111 3,850
Total current liabilities 23,972 26,446
Other long-term liabilities 1,952 1,914
Total stockholders' equity 82,787 77,630
Total liabilities and stockholders' equity $108,711 $105,990