Lionbridge Reports First Quarter Results with Record Revenue of $136.8 Million, GAAP EPS of $0.05 and Non-GAAP EPS of $0.14

Provides positive Q2 outlook with approximately $5-10 million sequential quarter revenue growth

WALTHAM, Mass. – May 07, 2015 — Lionbridge Technologies, Inc. (Nasdaq: LIOX), today announced financial results for the quarter ended March 31, 2015. Financial highlights for the quarter include:

  • Record revenue of $136.8 million, a year-on-year increase of $16.6 million or 14% compared to the first quarter of 2014.
  • GAAP net income of $3.1 million, or $0.05 per share based on 62.3 million fully diluted shares outstanding. This marks a year-on-year increase of $1.2 million, or $0.02 per share, compared to the first quarter of 2014.
  • Non-GAAP adjusted earnings of $8.8 million or $0.14 per share, a year-on-year increase of $4.0 million or $0.06 per share. The Company defines non-GAAP adjusted earnings as net income excluding merger, restructuring and acquisition-related costs, asset impairment costs, 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.
  • An ending cash balance of $25.2 million.
  • During the quarter the Company paid down $6 million of bank debt related to the financing of the Company’s recent acquisition of CLS Communication.
  • The Company acquired 254,000 shares of its common stock in Q1 for an aggregate purchase price of $1.4 million.

The company secured several new customer engagements in the quarter, including a market leader in personal computing solutions, a world leader in family entertainment, a leading brand in the beverage industry, and a leader in defense, aerospace and security, indicating a strong pace of new business beginning the year.

On January 7th, 2015, Lionbridge completed the acquisition of CLS Communication, a privately-held provider of translation solutions to clients in the financial services, industrial, public sector and life sciences markets with annual revenue of approximately $80 million.

“As we begin 2015 we are driving positive momentum in several key areas. We are integrating our acquisition of CLS as planned with ongoing opportunities for cost and revenue synergies. Sequential revenue with our largest client was largely stable in Q1 as compared to the prior quarter. Our marketing services offerings continue to accelerate. In fact, excluding revenue from our largest client, standalone revenue grew 10% year-on-year in constant currency excluding CLS,” said Rory Cowan, CEO, Lionbridge. “These positive trends, combined with a favorable currency environment for earnings, suggest solid financial performance in the second quarter and FY 2015.”

Lionbridge provided an outlook for the second quarter of 2015 with revenue of $142-147 million.

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 800-619-0332 and international callers can dial 210-234-0570. The passcode for the call is Lionbridge. The conference call will also be available live via the Internet 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. “Adjusted earnings” and “Adjusted Earnings per Share (EPS)” 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 measure for these measures are net income and diluted net income per share and has provided a reconciliation of GAAP net income to adjusted earnings and adjusted earnings per share at the end of this release.

About Lionbridge

Lionbridge enables more than 800 world-leading brands to increase international market share, speed adoption of products and effectively engage their customers in local markets worldwide. Using our innovative cloud technology platforms and our global crowd of more than 100,000 professional cloud workers, we provide translation, online marketing, global content management and application testing solutions that ensure global brand consistency, local relevancy and technical usability across all touch points of the customer lifecycle. Based in Waltham, Mass., Lionbridge maintains solution centers in 28 countries. 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, expected revenue and gross margin growth and outlook, the momentum, pace and strengthening of such growth, of Lionbridge in Q2 2015 and FY 2015, future business with Lionbridge’s largest customer. 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 integrate its acquisition of CLS Communication (“CLS”) and the pace of such integration actions; the timing of the realization of any synergies associated with the acquisition of CLS; the impact of foreign currency fluctuations on revenue, margins, costs, operating results and profitability and the Company’s ability to successfully manage this exposure through hedge instruments and other strategies; its 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, including a sequential decline in business with our largest customer; Lionbridge’s ability to expand its relationships with existing clients; 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 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 and the timing of the realization of such benefits; errors, interruptions or delays in cloud-based technology; breaches of security measures; 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 portion of the Company’s service engagements that are subject to the impact of foreign currency fluctuations; continued 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; longer collection cycles in particular jurisdictions; 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, 2014 and subsequent filings with the SEC (copies of which may be accessed through the SEC’s website at http://www.sec.gov).

 

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended
March 31,

(In thousands, except per share amounts)

2015

2014

Revenue

$

136,807

$

120,205

Operating expenses:

Cost of revenue (exclusive of depreciation and amortization included below)

90,550

83,079

Sales and marketing

11,975

9,920

General and administrative

23,868

20,346

Research and development

2,015

1,739

Depreciation and amortization

2,251

1,849

Amortization of acquisition-related intangible assets

998

798

Restructuring and other charges

2,938

335

Total operating expenses

134,595

118,066

Income from operations

2,212

2,139

Interest expense:

Interest on outstanding debt

484

149

Amortization of deferred financing charges

90

27

Interest income

16

19

Other income, net

(2,513

)

(348

)

Income before income taxes

4,167

2,330

Provision for income taxes

1,072

448

Net income

$

3,095

$

1,882

Net income per share of common stock:

Basic

$

0.05

$

0.03

Diluted

$

0.05

$

0.03

Weighted average number of common shares outstanding:

Basic

60,415

60,208

Diluted

62,324

63,506

 

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands)

March 31,
2015

December 31,
2014

ASSETS

Current assets:

Cash and cash equivalents

$

25,225

$

36,893

Accounts receivable, net of allowance of $250 at March 31, 2015 and December31, 2014

77,563

66,479

Unbilled receivables

27,986

25,843

Other current assets

17,338

12,090

Total current assets

148,112

141,305

Property and equipment, net

25,750

23,622

Goodwill

61,589

21,937

Acquisition-related intangible assets, net

45,566

12,232

Other assets

7,288

5,677

Total assets

$

288,305

$

204,773

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Short-term debt

$

2,407

$

Accounts payable

25,593

21,885

Accrued compensation and benefits

21,451

17,249

Accrued outsourcing

10,489

10,429

Accrued restructuring

3,587

3,492

Income taxes payable

3,794

2,123

Accrued expenses and other current liabilities

10,914

10,485

Deferred revenue

10,667

11,866

Total current liabilities

88,902

77,529

Long-term debt, net of current portion

90,672

27,000

Deferred income taxes, long-term

4,710

704

Other long-term liabilities

21,367

13,786

Total liabilities

205,651

119,019

Stockholders’ equity:

Preferred stock

Common stock

644

635

Additional paid-in capital

269,862

272,252

Accumulated deficit

(200,802

)

(203,897

)

Accumulated other comprehensive income

12,950

16,764

Total stockholders’ equity

82,654

85,754

Total liabilities and stockholders’ equity

$

288,305

$

204,773

 

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Earnings (Unaudited)

Comparison of Three Months Ended March 31, 2015 to Three Months Ended March 31, 2014

Three Months Ended
March 31,

(In thousands, except per share amounts)

2015

2014

Net income

$

3,095

$

1,882

Amortization of acquisition-related intangible assets

998

798

Stock-based compensation

1,790

1,814

Restructuring and other charges

2,938

335

Adjusted earnings

$

8,821

$

4,829

Fully diluted weighted-average number of common shares outstanding

62,324

63,506

Adjusted diluted earnings per share

$

0.14

$

0.08


Contact

Sara Buda
Lionbridge Technologies
sara.buda@lionbridge.com
Tel. +1-978-964-1404